FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-7603
HANNAFORD BROS. CO.
(Exact name of Registrant as specified in its charter)
Maine 01-0085930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
145 Pleasant Hill Road, Scarborough, Maine 04074
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (207) 883-2911
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.75 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements in the past 90 days. Yes [X]. No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X].
The aggregate market value of the Common Stock, $.75 par value, held by
non-affiliates as of March 3, 1995, was $761,856,581. This calculation
assumes that all shares of Common Stock beneficially held by directors and
executive officers of the Registrant are owned by "affiliates".
As of March 3, 1995, there were 41,939,013 outstanding shares of Common
Stock, $.75 par value, the only authorized class of common stock of the
Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
PART III: Proxy Statement for Annual Meeting of Shareholders to be held on
May 24, 1995.
Exhibit Index on Page: 51
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF THE BUSINESS
Hannaford Bros. Co. (the "Registrant" or the "Company") was incorporated in
Maine in 1902 as the successor to a business established by the Hannaford
family in 1883. Its principal executive offices are located at 145 Pleasant
Hill Road, Scarborough, Maine 04074. Its telephone number is (207) 883-2911.
Approximately 25.6% of the outstanding shares of the Registrant's common
stock, par value $.75 per share, is owned by certain members of the Sobey
family of Stellarton, Nova Scotia, and certain companies and trusts controlled
by them (the "Sobey Parties").
Consolidated sales and other revenues for 1994, including sales of $117.7
million from Wilson's Supermarkets acquired during that year (see below), were
$2,292 million, an increase of 11.5% over last year's sales and other revenues
of $2,055 million. Excluding the sales from Wilson's, the Registrant's sales
and other revenues were up 5.8% for the fiscal year. Comparable same store
sales were up 1.6% for fiscal year 1994 compared to 1993 when same store sales
were down 2.0%.
In July 1994, the Registrant acquired Wilson's Supermarkets based in
Wilmington, North Carolina. The purchase included 20 food stores in North and
South Carolina, five additional store sites and several shopping center
properties. The purchase price, including assumed liabilities, was
approximately $126.7 million. In addition to the acquisition, the Registrant
has purchased or leased a number of other new store sites in the region.
Together they represent a strategic approach to the Registrant's geographic
diversification in the Southeast.
The Registrant ships food and food-related products from its distribution
centers to an additional 18 independent wholesale customers. Sales to these
wholesale accounts amounted to 2.3% of total sales in 1994. Other revenues
from such activities as trucking, real estate and retail services amounted to
about 1.5% of total sales.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Registrant, through its operations and those of its subsidiaries, is
principally involved in the retail food business. The Registrant considers
its business a single segment under the applicable reporting rules. See Item
8, Financial Statements and Supplementary Data.
<PAGE>
NARRATIVE DESCRIPTION OF THE BUSINESS
The Registrant is a multi-regional food retailer, with 118 supermarkets
located throughout Maine and New Hampshire, and in parts of New York,
Massachusetts, Vermont, North Carolina and South Carolina. Its stores are
operated primarily under the names Shop 'n Save, Sun Foods and Wilson's. The
Registrant's goal is to offer consumers very competitive prices with
comprehensive product variety and outstanding freshness and quality in
perishables from modern and convenient facilities. The Registrant no longer
operates stand-alone drug stores, but operates 57 pharmacies within the
Registrant's supermarkets and combination stores.
The Registrant believes that one of the most important factors in the success
of a store, in addition to location, is format. The Registrant views
effective store formats as creating opportunities to enter new markets, expand
its share of markets where it already operates, and strengthen its overall
position.
Of the Registrant's 97 supermarkets in the northeastern region of the United
States, more than 75% are either new or have been expanded or relocated in the
past 10 years. During this period, a number of smaller outdated facilities
have been closed or sold. Since 1983, the Registrant has opened or acquired
62 combination stores with selling areas ranging from 22,300 to 61,700 square
feet. These stores offer under one roof the traditional all-department
supermarket, together with a bakery, video rental center and other services,
as well as expanded lines of general merchandise. The new stores opened by
the Registrant since 1983 also include four super warehouse stores with
selling areas of 36,000 to 46,600 square feet.
The Registrant operates 21 conventional supermarkets in North Carolina and
South Carolina. Twenty of these stores were acquired by the Registrant in
July 1994 and one new store has been opened since the acquisition. These
stores range in size from 16,300 to 28,800 square feet of selling area. In
1995, the Registrant expects to open several new stores in North Carolina and
Virginia and will introduce its newest store format to the region.
<PAGE>
The following tables set forth certain statistical information regarding the
Registrant's operations at the dates indicated:
FISCAL YEAR
NUMBER OF STORES 1990 1991 1992 1993 1994
Supermarkets
Beginning 76 89 88 93 93
Opened 4 3 7 4 10
Closed (2) (2) (2) (4) (5)
Sold 0 (2) 0 0 0
Acquired 11 0 0 0 20
Ending 89 88 93 93 118
Drug Stores
Beginning 41 41 42 6 3
Opened 0 1 1 0 0
Closed (3) (1) (3) (2) (3)
Sold 0 0 (34) (1) 0
Acquired 3 1 0 0 0
Ending 41 42 6 3 0
FISCAL YEAR-END
AVERAGE SQUARE FEET 1990 1991 1992 1993 1994
OF SELLING AREA
PER STORE
Supermarkets 25,100 26,700 28,200 29,800 30,100
Drug Stores 5,700 6,000 4,900 5,000 0
TOTAL SQUARE FEET OF
SELLING AREA
Supermarkets 2,238,000 2,347,000 2,619,000 2,771,000 3,547,000
Drug Stores 232,000 252,000 29,000 15,000 0
<PAGE>
As illustrated by the foregoing tables, the Registrant has continued to expand
its food store operations.
During 1994, net selling square footage increased 28%. In addition to the
acquisition of twenty Wilson's supermarkets, the Registrant opened seven new
food stores with selling areas ranging from 28,800 square feet to 47,500
square feet. In addition, three existing stores were relocated to larger, new
facilities.
During 1995, the Registrant intends to open eleven new food stores, four of
which will be located in the traditional northeastern market area and seven in
the southeast. All of the seven new stores in the southeast will be located
in new market areas of North Carolina and Virginia not currently served by the
acquired Wilson's stores. The new stores will range from 29,000 square feet
to 42,800 square feet of selling area. The Registrant will also relocate four
of its existing stores in the northeast to new facilities. It is expected
that net retail selling area will increase approximately 12% in 1995. It is
also expected that most of the new stores anticipated for 1995 will open in
the fourth quarter.
As part of its ongoing expansion program, the Registrant will also consider
the acquisition of one or more additional supermarkets, if attractive
opportunities become available.
Innovation in operating systems is an important component of the Registrant's
strategy, and the Registrant is committed to investing in new technology and
the development of new systems. The Registrant seeks to be an industry leader
in the application of new technology and systems in its retail, distribution
and administrative functions.
The Registrant owns and operates a distribution facility in South Portland,
Maine. This facility warehouses grocery, fresh fruits and vegetables, frozen
foods, meat, and dairy products in approximately 521,000 square feet of floor
area, and has dock facilities for 89 highway trailers. The distribution
center has a dedicated on-line computerized warehouse management system, which
efficiently controls the movement of product through the facility and
schedules labor for greater efficiency and productivity. Productivity in the
distribution facility also has been enhanced through the use of incentive
payment programs.
The Registrant also owns a distribution center and office facility in
Schodack, New York, which services certain store locations in New York,
Vermont, New Hampshire and Massachusetts. This facility warehouses grocery,
fresh fruit and vegetables, meat, dairy and frozen food products in
approximately 489,000 square feet of floor area and has dock facilities for
<PAGE>
129 highway trailers. Although approvals have been received to expand this
facility to approximately 1,200,000 square feet, the Registrant has no current
plans to do so. This distribution center operates under a team management
system which the Registrant calls Socio-Technical Systems. The Registrant
believes this operation to be one of the first successful non-manufacturing
uses of this type of team management concept in the country.
The Registrant also owns a 200,000 square foot distribution facility in
Winthrop, Maine. This facility distributes health and beauty care products,
specialty foods, pharmaceuticals and some general merchandise to all of the
Registrant's retail outlets. This facility has converted from a conventional
management system to a team-based one similar to that used in the Schodack,
New York, distribution center.
Merchandise is transported from the Registrant's distribution facilities by
Hannaford Trucking Company, a wholly-owned subsidiary, which is licensed as
an irregular route common carrier with 48 state authority. Hannaford Trucking
Company also hauls products for third-party customers, thereby reducing the
number of miles that its trucks travel empty.
Raw materials, as such, are not essential to the business of the Registrant.
The Registrant sells private brand products under the names "Shop 'n Save,"
"Bonnie Maid" and "Green Meadow." During 1995, the Registrant intends to
introduce a new private brand, under the name "Hannaford", for use throughout
its marketing territory.
Seasonal business affects the Registrant's operations in that sales are
generally greater in the second half of the year than in the first. (See Note
11 of Notes to Consolidated Financial Statements.)
Inventory levels are maintained at distribution centers and all retail
locations in amounts adequate to minimize "out of stock" conditions.
Backlog is not material to the Registrant's business.
No material portion of the business of the Registrant is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
At the retail level, the Registrant's supermarkets are in direct competition
with regional, national and local food and drug chains, some of which have
greater resources than the Registrant, as well as with other independent
operators. In addition, certain of the independent stores served by the
Registrant as wholesale customers are located in the same trade areas as the
Registrant's own stores and therefore compete with them.
<PAGE>
In its wholesale operations, the Registrant directly competes with numerous
other regional wholesalers, some of which supply franchised retail outlets.
The loss of any one or a few of the wholesale customers would not have a
materially adverse effect on the Registrant. Wholesale sales are not
material.
No material expenditures were made during fiscal 1992, 1993 or 1994 on
research activities relating to new or improved products, services or
techniques.
The Registrant does not foresee that material capital outlays will be needed
nor that material increases in operating expenses will be incurred for the
purpose of compliance with any statutory requirement respecting environmental
quality.
As of December 31, 1994, the Registrant had approximately 6,500 full-time and
10,000 part-time employees.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES.
Neither the Registrant nor any of its subsidiaries engages in any operations
in foreign countries, nor is a material portion of sales and revenues derived
from retail customers in foreign countries.
<PAGE>
ITEM 2. PROPERTIES
The Registrant owns the locations of 49 of its 118 food stores and leases the
remaining 69 stores. It owns all 3 of its distribution facilities and leases
its general office facility in Scarborough, Maine. The Registrant's
properties are located in Maine, New Hampshire, Vermont, northeastern
Massachusetts, eastern upstate New York, North Carolina and northeastern South
Carolina. The Registrant believes that its properties are well maintained and
are appropriate for its business needs.
The number of stores and facilities operated and the square feet of space at
December 31, 1994, consisted of:
Square Square Footage
Footage Selling
Units Gross Area Area
(in thousands)
Stores 118 5,035 3,547
Distribution and
administrative facilities 4 1,420 --
Total 122 6,455 3,547
The following table sets forth expiration dates of leased facilities, assuming
exercise of all renewal options:
Lease Administrative
Expiration Food stores Facilities
1995-2004 3
2005-2014 9
2015-thereafter 57 1
69 1
Further information concerning the Registrant's distribution facilities
appears under Item 1 at pages 5-6 above, which information is incorporated
herein by reference.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Registrant is a party or
to which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the Executive Officers of the Registrant is set
forth below.
Under the by-laws of the Registrant, all Executive Officers hold office, at
the pleasure of the Board of Directors, until the Annual Meeting of the
Directors next following their election or until others are elected and
qualified in their stead.
There are no family relationships between any of the Executive Officers of the
Registrant nor were there any special arrangements or understandings regarding
the selection of any officer.
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
JAMES L. MOODY, JR. 63 Chairman of the Board 04/28/60
Mr. Moody was elected Chairman of the Board in 1984. He also served in the
capacity of Chief Executive Officer from 1973 until 1992. He held the
position of President for more than five years prior to his election as
Chairman and has been employed by the Registrant in various supervisory and
executive capacities since 1959.
HUGH G. FARRINGTON 50 President 09/30/77
Chief Executive Officer
Mr. Farrington was elected President in 1984 and designated Chief Executive
Officer in 1992. He had held the position of Chief Operating Officer from
1984 to 1992. He had been Executive Vice President from 1981 until his
election as President. He has been employed by the Registrant in various
operating, supervisory and executive capacities since 1968.
RICHARD A. ANICETTI 37 Senior Vice President, 08/10/94
Retail Operations
Mr. Anicetti was elected Senior Vice President, Retail Operations in August
1994, and is assigned to the southeastern division. He had been Vice
President - Retail Operations/General Manager, New Hampshire and Massachusetts
from 1989 to 1994. He has been employed by the Registrant since 1980 in
various retail management capacities.
<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
NORMAN E. BRACKETT 65 Senior Vice President & 10/07/74
Chief Financial Officer
Mr. Brackett was elected Senior Vice President in 1990 and designated Chief
Financial Officer in 1992. He served as Chief Accounting Officer from 1990 to
1992. He joined the Registrant as Vice President, Management Services in
1974, and has directed the Registrant's accounting, auditing and technical
information systems since that time.
ROBERT E. DUNTON 53 Senior Vice President, 08/10/94
Retail Operations/
General Manager - Maine
Mr. Dunton was elected Senior Vice President, Retail Operations/General
Manager - Maine in 1992. He had been Senior Vice President - General Manager,
Alexander's since 1990, Vice President - General Merchandise from 1987 to
1990, Vice President - Wellby Super Drug Stores from 1984 to 1987 and Vice
President - Retail Operations from 1981 to 1984.
PAUL A. FRITZSON 41 Senior Vice President, 01/02/92
Marketing
Mr. Fritzson was elected Senior Vice President, Marketing in August 1994. He
had been Vice President - Marketing from 1992 to 1994 and Vice President,
General Merchandise from 1990 to 1992. He had served previously in various
staff and merchandising capacities since 1978.
RONALD C. HODGE 47 Senior Vice President, 08/10/94
Retail Operations
Mr. Hodge was elected Senior Vice President, Retail Operations in August 1994,
and is assigned to the western division. He had been Vice President - Retail
Operations/General Manager, New York and Vermont since 1989. He has been
employed by the Registrant in various retail management capacities since 1980.
JAMES J. JERMANN 50 Senior Vice President, 08/05/83
Merchandising
Mr. Jermann was elected Senior Vice President, Merchandising in 1990. He had
been Vice President, Merchandising from 1983 to 1990. He has been employed by
the Registrant since 1978 in various merchandising capacities. He was
previously Director of Grocery Merchandising.
<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
BLYTHE J. MCGARVIE 38 Senior Vice President, 11/14/94
Finance
Ms. McGarvie joined the Registrant as Senior Vice President - Finance in
November 1994. From 1991 to 1994 she was Chief Administrative Officer for the
Pacific Rim Group of Sara Lee Corporation. From 1985 to 1991 she was employed
by Kraft General Foods in various finance positions.
LARRY A. PLOTKIN 44 Senior Vice President, 10/06/81
Development & Planning
Mr. Plotkin was elected Senior Vice President, Development & Finance in 1990
and Senior Vice President, Development & Planning in 1992. He had been Vice
President from 1989 to 1990. He previously served as Vice President,
Corporate Development from 1981 to 1987 and Vice President, Wellby Super Drug
Stores from 1987 to 1989. He has been employed by the Registrant since 1972
in various real estate capacities.
MICHAEL J. STROUT 40 Senior Vice President, 12/19/94
Human Resources
Mr. Strout rejoined the Registrant as Senior Vice President, Human Resources
in December 1994. From 1990 through 1994 he was Vice President - Human
Resources and later Senior Vice President - Human Resources at Topps Markets,
Inc., Buffalo, New York. From 1985 to 1990 Mr. Strout had been employed by
the Registrant in various Human Resource management positions.
ANDREW P. GEOGHEGAN, ESQ. 44 Vice President, Secretary 09/14/87
& General Counsel
Mr. Geoghegan joined the Registrant as Vice President, General Counsel in
September 1987. He was elected Secretary in 1992. From 1979 to 1987 he was
in private law practice with the firm of Kassoy, Lopez & Geoghegan Law
Corporation, Beverly Hills, California, specializing in corporate, tax and
real estate law.
ANDREW N. WESTLUND 42 Vice President, 10/04/92
Distribution
Mr. Westlund was elected Vice President, Distribution in 1992. He served as
Vice President - Warehousing in 1992 after holding the position of Director,
Warehouse Operations-New York since his employment in 1989. He was previously
employed by Super Valu, Minneapolis, Minnesota as Warehouse Manager.
LARRY A. WILSON 36 Vice President, Wilson's 08/10/94
Mr. Wilson was elected Vice President, Wilson's in August 1994. For more than
five years he held various executive positions with Wilson's Supermarkets
located in Wilmington, North Carolina.
<PAGE>
Part II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock of the Registrant has been listed on the New York Stock
Exchange since July 18, 1986. The following table sets forth the dividends
per share and the high and low sales prices of the Common Stock on the New
York Stock Exchange composite tapes during each quarter of 1993 and 1994.
QUARTERLY
SALE PRICE DIVIDENDS
HIGH LOW PER SHARE
1st Quarter, 1993 $23.500 $20.500 .085
2nd Quarter, 1993 23.500 21.000 .085
3rd Quarter, 1993 24.250 20.250 .085
4th Quarter, 1993 25.000 20.000 .085
1st Quarter, 1994 $26.250 $21.000 .095
2nd Quarter, 1994 24.000 19.750 .095
3rd Quarter, 1994 24.625 21.375 .095
4th Quarter, 1994 26.625 23.000 .095
There are approximately 11,900 record holders of the Common Stock. Fiscal
1994 was the forty-sixth consecutive year that dividends were paid on the
Common Stock and the thirty-second consecutive year that the aggregate
dividend paid per share (after adjusting for stock splits) has increased. On
February 7, 1995, the Board of Directors voted to increase the quarterly
dividend to $.105 per share for the dividend due to be paid on March 23, 1995.
Future dividends will depend on the Registrant's earnings and financial
condition.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION> Fiscal Year
1994 1993 1992 1991 1990
(In thousands except per share amounts)
EARNINGS STATEMENT DATA:
<S> <C> <C> <C> <C> <C>
Sales and other revenues................................. $2,291,755 $2,054,889 $2,066,023 $2,007,960 $1,687,649
Cost of sales............................................ 1,728,499 1,543,932 1,552,155 1,513,130 1,281,099
Gross margin............................................. 563,256 510,957 513,868 494,830 406,550
Selling, general and administrative expense.............. 437,548 399,437 411,487 401,451 323,853
Operating profit......................................... 125,708 111,520 102,381 93,379 82,697
Interest expense, net.................................... 21,360 19,337 20,711 20,743 12,955
Earnings before income taxes............................. 104,348 92,183 81,670 72,636 69,742
Income taxes............................................. 42,060 37,578 32,476 29,286 27,523
Earnings before cumulative effect
of change in accounting principle...................... 62,288 54,605 49,194 43,350 42,219
Cumulative effect of accounting change................. - 2,100 - - -
Net earnings............................................. $ 62,288 $ 56,705 $ 49,194 $ 43,350 $ 42,219
Per common share(1):
Earnings before cumulative effect of accounting
change $ 1.50 $ 1.33 $ 1.21 $ 1.08 $ 1.06
Cumulative effect of accounting change.............. - .05 - - -
Net earnings........................................ $ 1.50 $ 1.38 $ 1.21 $ 1.08 $ 1.06
Cash dividends...................................... $ .38 $ .34 $ .30 $ .26 $ .22
Weighted average number of common shares outstanding(1).. 41,544 41,049 40,520 39,939 39,435
December January January December December
31, 1994 1, 1994 2, 1993 28, 1991 29, 1990
Balance Sheet Data: (Dollar amounts in thousands except per share data)
Working capital.......................................... $ 42,707 $ 118,830 $ 105,187 $ 68,140 $ 54,467
Total assets............................................. 877,605 795,355 768,596 705,516 629,239
Current maturities:
Long-term debt...................................... 14,409 7,180 7,015 6,006 5,301
Obligations under capital leases.................... 1,382 1,412 1,387 1,480 1,616
Long-term debt, excluding current maturities............. 153,687 156,716 171,578 165,252 159,521
Obligations under capital leases, excluding current
maturities............................................. 69,552 58,835 54,930 49,315 49,036
Redeemable preferred stock of a subsidiary............... - 1,883 2,781 2,781 2,781
Shareholders' equity..................................... 454,475 396,715 345,796 297,801 256,036
Book value per share(1).................................. $ 10.88 $ 9.63 $ 8.48 $ 7.42 $ 6.46
(1)Restated for the effect of a two-for-one stock split in the form of a 100% stock dividend paid on March 10, 1992.
/TABLE
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This analysis of the Company's results of operations and financial condition
should be read in conjunction with the accompanying consolidated financial
statements, including the notes thereto, and the information presented in the
summary of selected financial data. All footnote references are to Notes to
Consolidated Financial Statements.
RESULTS OF OPERATIONS
Overview
In 1994, the Company achieved increased sales and earnings while continuing to
experience significant competitive pressures in the majority of its marketing
territories. Sales for 1994 were $2,291.8 million, an increase of $236.9
million or 11.5% over last year's sales of $2,054.9 million. The sales
increase is attributable to an increase in comparable store sales, the
acquisition of Wilson's Supermarkets (Note 4), and the Company's store
construction program. Net earnings for 1994 were $62.3 million, an increase
of 9.8% over net earnings in 1993 of $56.7 million. During 1993, the Company
adopted STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 109 - ACCOUNTING FOR
INCOME TAXES. The cumulative effect of this adjustment, which increased net
earnings by $2.1 million, is included in 1993 results. Excluding the change
in accounting, 1994 net earnings increased 14.1% over 1993 results.
Despite continuing competitive pressures throughout the Company's marketing
territories, the Company posted a comparable store sales increase of 1.6% for
the year and 3.0% when comparing the fourth quarter of 1994 with the fourth
quarter of 1993. The Company has been effective at increasing its
profitability while reducing its overall gross margins. This resulted from
continuing cost containment efforts coupled with operating synergies that have
been created by internal growth and the acquisition of Wilson's Supermarkets.
The acquisition has enabled the Company to diversify geographically and to
secure a portion of the market in the growing and vibrant Southeastern region.
Including the acquisition, the Company added approximately 28% to its
supermarket selling area in 1994 and currently expects to add approximately
12% in 1995.
<PAGE>
The following table sets forth for the years indicated the percentages which
selected items in the consolidated statements of earnings are to net sales and
other revenues and the percentage change in the dollar values of such items as
compared to the indicated prior year:
PERCENTAGE OF SALES YEAR-TO-YEAR PERCENTAGE
AND OTHER REVENUES CHANGE IN DOLLAR VALUES
EXCEPT PER SHARE AMOUNTS Fiscal 1994 Fiscal 1993
Fiscal Year Compared to Compared to
1994 1993 1992 Fiscal 1993 Fiscal 1992
100.0% 100.0% 100.0% Sales and other revenues 11.5 (0.5)%
24.6 24.9 24.9 Gross margin 10.2 (0.6)
Selling, general and
19.1 19.4 19.9 administrative expenses 9.5 (2.9)
5.5 5.5 5.0 Operating profit 12.7 8.9
1.0 1.0 1.0 Interest expense, net 10.5 (6.6)
4.5 4.5 4.0 Earnings before income taxes 13.2 12.9
1.8 1.8 1.6 Income taxes 11.9 15.7
Earnings before cumulative
effect of change in
2.7 2.7 2.4 accounting principle 14.1 11.0
Cumulative effect of change
-- 0.1 -- in income tax accounting -- --
2.7% 2.8% 2.4% Net earnings 9.8 15.3
$1.50 $1.38 $1.21 Earnings per common share 8.7 14.0
Fiscal 1992 includes 53 weeks of operations.
<PAGE>
Sales
Sales and other revenues rose 11.5% in 1994, to $2,291.8 million, an increase
of $236.9 million over 1993 results. Retail sales increased $240.9 million or
12.3% to $2,204.2 million, reflecting an increase of $29.1 million or 1.6% in
sales from supermarkets that were open and not expanded or remodeled in both
periods presented ("comparable store sales") and additional sales of $211.8
million from the net impact of new, expanded and closed stores as well as the
acquisition of Wilson's Supermarkets. Excluding the sales and other revenues
from Wilson's Supermarkets, the Company's sales and other revenues were up
5.8% for the year. Other sales and revenues, which include trucking,
wholesale, real estate and miscellaneous retail operations, decreased $4.0
million in 1994.
The comparable store sales increase of 1.6% is the continuation of a positive
trend that started in late 1993. This is a significant reversal in the trend
of comparable store sales, as they had been running negative since the latter
part of 1991. Fourth quarter 1994 comparable store sales increased 3.0% in
comparison to fourth quarter 1993 due principally to unusually strong sales
during the Christmas holiday season. However, management does not expect this
high rate of increase to continue into 1995. These increases were achieved
despite low overall food inflation, deflation in some product lines, intense
supermarket competition in most of the Company's marketing territories and
expanding supercenter competition in some of its markets.
In 1993 (52 weeks), sales and other revenues were $2,054.9 million, a decrease
of $11.1 million from 1992 (53 weeks) results. Retail sales decreased $7.0
million or 0.4%. This decrease is the result of the 53rd week of operations
included in 1992 coupled with the loss of sales from the 34 Wellby Super Drug
stores that were sold in May 1992 (Note 5). Had the sales from these 34 drug
stores and the 53rd week been excluded from 1992 results, sales would have
increased 3.3% in 1993. Comparable store sales on a 52-week basis decreased
2.0% in 1993. Other sales and revenues, which include trucking, wholesale,
real estate and miscellaneous retail operations, decreased $4.1 million in
1993.
Gross Margin
Gross margin decreased in 1994 to 24.6% of sales and other revenues in
comparison to 24.9% in 1993. This decrease in margins continues a trend that
began in the second half of 1993. The Company continues to focus on
maintaining a competitive pricing strategy in its marketing areas by passing
operating efficiencies on to its customers in the form of lower prices. The
Company intends to continue this activity in 1995. In both 1993 and 1992,
gross margin was 24.9% of sales and other revenues. In comparing 1993 with
1992, decreased margins in certain product categories were offset by increased
margins in other product categories.
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased to 19.1% of sales and
other revenues in 1994 as compared to 19.4% in 1993. This continues a
downward trend that began in 1992. Payroll and payroll related expenses,
which exceeded 50% of selling, general and administrative expenses in both
years, decreased as a percentage of sales in 1994 as compared to 1993. This
resulted from continuing cost containment efforts relating to salaries and
wages and employee-related insurance costs. The 1994 reduction of selling,
general and administrative expenses expressed as a percentage of sales was
also favorably impacted by the operations of Wilson's Supermarkets.
Selling, general and administrative expenses decreased to 19.4% of sales and
other revenues in 1993 as compared to 19.9% in 1992. The Company achieved
this substantial decrease despite lower comparable store sales. This
achievement was a reflection of ongoing cost containment programs combined
with the restructuring that occurred following the sale of the Wellby Super
Drug store chain in May 1992. Payroll and payroll related expenses were
primarily responsible for this decrease. Included in 1992 selling, general
and administrative expenses was a nonrecurring gain from the sale of the
Wellby Super Drug store chain of $4.5 million and a charge for restructuring
of $4.0 million, the net of which amounted to a reduction in selling, general
and administrative expenses of $0.5 million (Note 5).
Interest Expense, Net
Net interest expense expressed as a percentage of sales and other revenues was
1.0% in all years presented. Net interest expense consists of the following:
(In thousands)
1994 1993 1992
Interest on debt $16,508 $17,249 $17,975
Capital lease interest 8,615 7,230 6,509
Capitalized interest (1,669) (1,530) (1,264)
Interest income (2,094) (3,612) (2,509)
$21,360 $19,337 $20,711
Net interest expense in 1994 was $21.4 million, an increase of 10.5% from 1993
net interest expense of $19.3 million, reflecting a decrease in interest
income coupled with an increase in capital lease interest. The decrease in
interest income in 1994 is the result of a lower level of invested funds in
1994 as compared to 1993. The Company utilized the majority of its invested
funds when it acquired Wilson's Supermarkets in July 1994. The increased
capital lease interest resulted from the Company entering into several long-
term leases for new supermarkets.
<PAGE>
Net interest expense in 1993 was $19.3 million, a decrease of 6.6% from 1992
net interest expense of $20.7 million, reflecting an increase in interest
income coupled with a decrease in debt interest. The increase in interest
income in 1993 is the result of a higher average level of invested funds in
1993 as compared to 1992. The lower debt interest was caused by decreased
debt levels resulting from scheduled as well as early paydowns of the
Company's debt instruments.
Income Taxes
The provision for income taxes includes both federal and state income taxes.
The effective tax rate decreased in 1994 to 40.3% from 40.8% in 1993. The
higher effective tax rate in 1993 was due primarily to a temporary reduction
in 1993 of certain state income tax credits. The effective tax rate increased
in 1993 to 40.8% from 39.8% in 1992. This increase was primarily the result
of an increase in the federal corporate income tax rate. The Revenue
Reconciliation Act of 1993 was signed into law in August 1993, and among other
items, increased the federal corporate income tax rate by 1% to 35%,
retroactive to January 1, 1993. Assuming there are no additional federal or
state income tax rate increases, the Company expects the effective rate for
1995 and forward to be approximately 40.5%.
During the first quarter of 1993, the Company adopted SFAS NO. 109 -
ACCOUNTING FOR INCOME TAXES (Note 9). The cumulative effect of this
adjustment, which increased net earnings by $2.1 million, is reflected in 1993
results.
Net Earnings and Earnings Per Common Share
Net earnings increased 9.8% in 1994 to $62.3 million or 2.7% of sales and
other revenues, an increase of $5.6 million from 1993 earnings of $56.7
million or 2.8% of sales and other revenues. Excluding the change in
accounting for income taxes, 1994 net earnings increased 14.1% over those
reported in 1993. This increase is the result of increased sales and reduced
selling, general and administrative expenses expressed as a percentage of
sales, offset by a reduction in gross margin percentage.
Net earnings rose 15.3% in 1993 (52 weeks) to $56.7 million, an increase of
$7.5 million over 1992 (53 weeks) earnings of $49.2 million. Net earnings
were 2.8% of sales and other revenues in 1993 as compared to 2.4% in 1992.
This increase is the result of significantly reduced selling, general and
administrative expenses coupled with the cumulative effect of the change in
income tax accounting and offset by the current year income tax provision.
Net earnings per common share in 1994 were $1.50 as compared to $1.38 in 1993,
an increase of 8.7%. Excluding the change in accounting for income taxes, net
earnings per common share in 1994 increased 12.8% over 1993 results.
<PAGE>
Net earnings per common share increased 14.0% in 1993 (52 weeks) to $1.38 from
$1.21 in 1992 (53 weeks). The cumulative effect of the change in income tax
accounting increased 1993 net earnings by $.05 per share. Management
estimates that the extra week of operations in 1992 increased net earnings by
$.03 per share.
Other Items and Impact of Inflation
Seasonal business affects the Company's operations in that sales are generally
greater in the second half of the year (Note 11).
In recent years, the impact of inflation on the Company's operating results
has been minimal, reflecting generally lower rates of inflation in the
economy. The Company's business is characterized by large purchases and high
sales volumes extended across diverse product lines, rapid inventory turns and
low profit margins. In this environment, vendor price changes are typically
passed on immediately to the customer. The Company does not believe inflation
or deflation has significantly affected its competitive position in the
industry. However, since price changes do cause sales dollars to fluctuate
more than sales quantities, the use of the LIFO method of accounting for
inventories reduces the impact of price changes on earnings by matching
current costs with current revenues.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Overview
Measures of liquidity for each of the last three fiscal years are as follows:
December 31, January 1, January 2,
1994 1994 1993
Cash and cash items $ 41.0 million $ 77.5 million $ 94.8 million
Short-term investments -- $ 19.9 million $ 5.0 million
Working capital (FIFO inventory) $ 57.1 million $133.6 million $120.8 million
Current ratio (FIFO inventory) 1.36 1.98 1.83
Unused lines of revolving credit $ 50.0 million $ 50.0 million $ 79.0 million
Unused lines of short-term credit $ 28.0 million $ 30.0 million $ 31.0 million
The Company maintained a solid capital structure at the end of fiscal 1994
despite the decreases in overall liquidity. The decreases in cash and cash
items, short-term investments, working capital and current ratio when
comparing year-end 1994 with year-end 1993, are the result of the Company's
acquisition of Wilson's Supermarkets (Note 4). Lines of credit represent a
continuing source of capital and remain available for contingency purposes.
The Company is in a solid financial position to carry out its current retail
expansion plans in 1995 and beyond. The Company has used internally generated
funds, bank borrowings, capital leases, and proceeds from the sale of its drug
stores (Note 5), to finance its continuing operations and growth.
In February 1993, the Company announced a stock repurchase program authorizing
the purchase of up to $55 million in shares of Hannaford common stock over the
next three years. The program authorizes purchases on the open market and
through privately negotiated transactions if special market opportunities
arise. As of December 31, 1994, the Company had not repurchased any shares
under this program.
Cash Flows from Operating Activities
Cash provided by operating activities was $143.9 million in 1994, an increase
of $52.4 million over the $91.5 million provided in 1993. This increase is
primarily attributable to improved results of operations and higher
depreciation and amortization coupled with a decreased investment in working
capital. Excluding the acquisition of Wilson's Supermarkets, inventories
decreased $6.4 million in 1994 versus a $5.0 million increase in 1993. This
decrease is the result of a reduction in warehouse inventories of $13.7
million, offset by an increase in retail inventories of $7.3 million.
Management expects to maintain these lowered levels of inventories in its
warehouses as it applies buying practices designed to meet its product
distribution needs in a more efficient and cost effective manner. This cash
inflow is expected to continue supporting the Company's capital spending
program, dividend payments to shareholders, and other capital needs.
<PAGE>
Cash provided by operating activities was $91.5 million in 1993, a decrease of
$18.9 million from the 1992 amount of $110.4 million. This decrease was due
primarily to an increased investment in working capital.
Cash Flows from Investing Activities
Cash used in investing activities increased $82.7 million during 1994 to
$169.7 million from $86.9 million in 1993. This increase is primarily the
result of acquiring Wilson's Supermarkets. The acquisition, net of the
reduction in short-term investments used to finance it, accounted for $75.5
million of the increase. Total capital investments totalled $209.7 million in
1994 and were composed of $84.0 million in additions to property, plant and
equipment, $67.2 million of goodwill and $41.0 million of property, plant and
equipment in the acquisition of Wilson's Supermarkets, $12.5 million in non-
cash capital lease additions and $5.0 million in deferred charges and computer
software costs. These 1994 capital investments were primarily composed of
costs incurred in acquiring Wilson's Supermarkets and in building and
equipping new and expanded supermarkets.
Net retail selling space for food stores increased 28% in 1994 to 3,547,000
square feet at year-end, an increase of 776,000 square feet over 1993 year-end
sales area. The Company added twenty supermarkets or 448,000 square feet of
retail selling space when it acquired Wilson's Supermarkets in July 1994. In
addition, the Company opened ten new supermarkets and one expanded supermarket
while closing five smaller, outdated facilities. A number of 1994 supermarket
construction starts will not be completed until 1995. The number of
supermarkets and square footage of selling area at year-ends 1994, 1993 and
1992 are summarized below:
FOOD STORES
Number of Square Footage
Units Selling Area
1994 118 3,547,000
1993 93 2,771,000
1992 93 2,619,000
Newly constructed supermarkets in 1994, excluding those acquired from
Wilson's, together with their square footage of selling area, are listed
below:
Square Footage
Location Selling Area
Saratoga Springs, NY 48,000
Rotterdam, NY 47,000
Bennington, VT 40,000
Kingston, NY 47,000
Oxford, ME 38,000
Fayetteville, NC 29,000
Houlton, ME 22,000
Lunenburg, MA 39,000
Calais, ME 22,000
Oneonta, NY 38,000
<PAGE>
Cash used in investing activities increased $33.4 million in 1993 to $86.9
million from $53.5 million in 1992. This increase is primarily the result of
the Company's sale of the Wellby Super Drug store chain in 1992. Net proceeds
of $29.8 million were realized from this divestiture. In addition, the
Company's short-term investments increased by $14.9 million in 1993. The
Company's short-term investment objectives were to maximize yields while
minimizing risk and maintaining liquidity.
Cash Flows from Financing Activities
The Company continues to maintain a strong capital structure. Management
believes that maintaining such financial flexibility provides a significant
competitive advantage and allows the Company to be opportunistic in terms of
acquisitions and expansions.
Cash used in financing activities was $10.8 million in 1994 as compared to
$21.8 million in 1993. This decrease is primarily the result of proceeds of
$25.5 million from the issuance of long-term debt in 1994 offset by an
increase of $11.9 million in payments on long-term debt. In December 1994,
the Company received $25.0 million in senior unsecured debt financings with
terms of 8 and 12 years and interest rates of 8.4% and 8.5%, respectively.
During 1994, the Company made debt payments of $19.3 million in early
extinguishments and prepayments on certain debt in addition to regular debt
payments (Note 2). The Company paid $15.9 million in dividends to both common
and preferred shareholders in 1994. These amounts were offset by proceeds of
$9.3 million received during 1994 from the issuance of approximately 475,000
shares of common stock. The majority of these shares were issued under
certain employee stock plans (Note 8) and per agreement with the Sobey Parties
(Note 6).
The acquisition of Wilson's Supermarkets (Note 4) was financed by cash and
cash items, the Company's common stock and a promissory note. This
acquisition will have no adverse impact on the Company's ability to fund its
1995 capital program. In addition to this acquisition, the Company is
constructing additional supermarkets in North Carolina and Virginia.
Quarterly cash dividends declared during 1994 totalled $.38 per common share,
an increase of 11.8% over the $.34 per share declared during 1993. This was
the thirty-second consecutive year that the aggregate dividend paid per common
share, after adjustment for stock splits and stock dividends, has increased.
Common stock dividend payments in 1994 represented 25.4% of net earnings
available to common shareholders. In February 1995, the Company declared an
increased quarterly dividend on its common stock of $.105 per share, payable
March 23, 1995. The new quarterly dividend of $.105 per share represents an
increase of 10.5% over the $.095 per share paid in March 1994.
Cash used for financing activities totalled $21.8 million in 1993 as the
Company did not issue any long-term debt during the year. The Company
experienced a decrease in its long-term debt of $14.7 million during 1993 as
it made early extinguishments and prepayments on certain debt secured by real
estate and equipment, totalling $7.8 million. The Company paid $14.2 million
<PAGE>
in dividends to both common and preferred shareholders in 1993. These amounts
were offset by proceeds of $8.4 million received during 1993 from the issuance
of approximately 435,000 shares of common stock.
1995 Capital Program
Total capital expenditure commitments are projected to be in the range of $170
million in 1995, primarily for new, expanded and relocated store construction,
equipment, vehicles and other asset expenditures. During 1995, this program
will be subject to continuing change and review as conditions warrant. Net
square footage of retail selling space is expected to increase by
approximately 12% during 1995. In addition, a number of projects scheduled to
start in 1995 will not be completed until 1996. The 1995 capital program is
expected to be financed by cash and cash items, internally generated funds and
leases.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Presented below are the Registrant's Consolidated Balance Sheets, Consolidated
Statements of Earnings, Consolidated Statements of Changes in Shareholders'
Equity, Consolidated Statements of Cash Flows and accompanying Notes to
Consolidated Financial Statements.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders of
Hannaford Bros. Co.:
We have audited the consolidated financial statements and the financial
statement schedules of Hannaford Bros. Co. and subsidiaries listed in Item
14(a) of this Form 10-K. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Hannaford
Bros. Co. and subsidiaries as of December 31, 1994 and January 1, 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
As discussed in Note 9 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993.
s/Coopers & Lybrand
Portland, Maine
January 23, 1995
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
December 31, January 1,
1994 1994
Current assets:
Cash and cash items $ 40,955 $ 77,496
Short-term investments (note 1C) - 19,855
Accounts receivable, net 14,240 15,765
Inventories (note 1D) 132,423 129,934
Prepaid expenses 6,210 4,695
Deferred income taxes (note 9) 7,519 7,920
Total current assets 201,347 255,665
Property, plant and equipment, net 503,941 437,606
(notes 1E and 2)
Leased property under capital leases, net 58,821 50,070
(note 3)
Investment in financing leases 1,753 1,787
Other assets:
Deferred charges, net (note 1G) 101,548 38,416
Computer software costs, net (note 1H) 8,382 8,790
Notes receivable 1,229 2,395
Miscellaneous assets 584 626
Total other assets 111,743 50,227
$877,605 $795,355
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands except share amounts)
December 31, January 1,
1994 1994
Current liabilities:
Current maturities of long-term debt (note 2) $ 14,409 $ 7,180
Obligations under capital leases (note 3) 1,382 1,412
Accounts payable 89,927 79,679
Accrued payroll 19,017 17,323
Other accrued expenses 29,738 29,348
Income taxes 4,167 1,893
Total current liabilities 158,640 136,835
Deferred income tax liabilities (note 9) 21,886 23,753
Other liabilities 19,365 20,618
Long-term debt (note 2) 153,687 156,716
Obligations under capital leases (note 3) 69,552 58,835
Redeemable preferred stock of a subsidiary,
par value $100 per share - 1,883
Shareholders' equity (notes 6 and 8):
Class A Serial Preferred stock, no par,
authorized 2,000,000 shares - -
Class B Serial Preferred stock, par value
$.01 per share, authorized 28,000,000 shares - -
Common stock, par value $.75 per share:
Authorized 110,000,000 shares;
issued and outstanding 41,779,342
shares at December 31, 1994, and
41,210,774 shares at January 1, 1994 31,335 30,908
Additional paid-in capital 110,669 99,748
Preferred stock purchase rights 418 412
Retained earnings 312,053 265,647
Total shareholders' equity 454,475 396,715
$877,605 $795,355
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share amounts)
FISCAL YEAR
1994 1993 1992
Sales and other revenues $2,291,755 $2,054,889 $2,066,023
Cost of sales 1,728,499 1,543,932 1,552,155
Gross margin 563,256 510,957 513,868
Selling, general and administrative
expenses 437,548 399,437 411,487
Operating profit 125,708 111,520 102,381
Interest expense, net (notes 1I and 2) 21,360 19,337 20,711
Earnings before income taxes 104,348 92,183 81,670
Income taxes (notes 1J and 9) 42,060 37,578 32,476
Earnings before cumulative effect of
change in accounting principle 62,288 54,605 49,194
Cumulative effect to January 3, 1993
of change in income tax accounting -- 2,100 --
Net earnings $ 62,288 $ 56,705 $ 49,194
Per share of common stock:
Earnings before cumulative effect of
change in accounting principle $ 1.50 $ 1.33 $ 1.21
Cumulative effect to January 3, 1993
of change in income tax accounting -- .05 --
Net earnings $ 1.50 $ 1.38 $ 1.21
Cash dividends $ .38 $ .34 $ .30
Weighted average number of common shares
outstanding 41,544 41,049 40,520
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
Additional
Common Stock Paid-in Retained Preferred Stock
Shares Amount Capital Earnings Purchase Rights
<S> <C> <C> <C> <C> <C>
Balance, December 28, 1991 40,148 $30,111 $ 80,896 $186,393 $402
Net earnings 49,194
Cash dividends:
Redeemable preferred stock (278)
Common stock (12,170)
Preferred stock purchase rights (6) 6
Shares issued to certain shareholders
per agreement 151 113 3,200
Shares issued under employee
benefit plans 477 358 7,577
Balance, January 2, 1993 40,776 30,582 91,673 223,133 408
Net earnings 56,705
Cash dividends:
Redeemable preferred stock (220)
Common stock (13,967)
Preferred stock purchase rights (4) 4
Shares issued to certain shareholders
per agreement 127 95 2,660
Shares issued under employee
benefit plans 268 201 4,548
Shares issued through redemption
of preferred stock 40 30 867
Balance, January 1, 1994 41,211 30,908 99,748 265,647 412
Net earnings 62,288
Cash dividends:
Redeemable preferred stock (74)
Common stock (15,802)
Preferred stock purchase rights (6) 6
Shares issued to certain shareholders
per agreement 143 108 3,152
Shares issued under employee
benefit plans 332 249 5,839
Shares issued in the acquisition of
Wilson's Supermarkets 93 70 1,930
Balance, December 31, 1994 41,779 $31,335 $110,669 $312,053 $418
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
1994 1993 1992
Cash flows from operating activities:
Net income $ 62,288 $ 56,705 $ 49,194
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 62,756 56,353 54,914
Cumulative effect of accounting
change - (2,100) -
Gain on divestiture - - (4,556)
Decrease (increase) in inventories 6,372 (5,060) 13,875
Decrease (increase) in receivables and
prepayments 6,903 (4,232) (1,029)
Increase (decrease) in accounts payable
and accrued expenses 4,988 (6,038) (978)
Increase (decrease) in income
taxes payable 2,274 (4,652) 2,004
Increase (decrease) in deferred
taxes (1,466) 1,619 (2,762)
Other operating activities (178) (1,097) (254)
Net cash provided by
operating activities 143,937 91,498 110,408
Cash flows from investing activities:
Acquisition of Wilson's Supermarkets,
net of cash acquired (110,201) - -
Acquisition of property, plant
and equipment (83,969) (70,891) (73,101)
Net proceeds from divestiture - - 29,814
Sale of property, plant and
equipment, net 9,641 6,498 1,363
Increase in deferred charges (2,308) (4,569) (3,655)
Increase in computer software costs (2,676) (3,133) (2,956)
Decrease (increase) in short-term
investments 19,855 (14,852) (5,003)
Net cash used in investing
activities (169,658) (86,947) (53,538)
Cash flows from financing activities:
Principal payments under capital
lease obligations (1,359) (1,362) (1,375)
Proceeds from issuance of long-
term debt 25,500 - 18,252
Payments of long-term debt (26,550) (14,697) (10,916)
Issuance of common stock 9,348 8,402 11,248
Dividends paid (15,876) (14,187) (12,448)
Redemption of preferred stock (1,883) - -
Net cash provided by (used in)
financing activities (10,820) (21,844) 4,761
Net increase (decrease) in cash and
cash items (36,541) (17,293) 61,631
Cash and cash items at beginning of year 77,496 94,789 33,158
Cash and cash items at end of year $ 40,955 $ 77,496 $ 94,789
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information
Acquisition of Wilson's Supermarkets, net of cash acquired:
(In thousands)
Working capital, other than cash $ 9,894
Property, plant and equipment 41,044
Goodwill 67,160
Other liabilities (1,397)
Note payable (4,500)
Issuance of common stock (2,000)
Net cash used to acquire Wilson's Supermarkets $110,201
Cash paid during the year for:
(In thousands)
1994 1993 1992
Interest (net of amount capitalized,
$1,669 in 1994, $1,530 in 1993 and
$1,264 in 1992) $24,205 $23,468 $22,993
Income taxes 41,286 40,529 33,151
Supplemental disclosure of noncash investing and financing activities
Capital lease obligations totalling $12,480,000, $5,404,000 and $7,490,000
were incurred during 1994, 1993 and 1992, respectively, when the Company
entered into leases for certain improved real estate. Non-cash debt
obligations totalling $5,250,000 were incurred during 1994 primarily in
the Company's acquisition of Wilson's Supermarkets. In addition, the
Company issued $2,000,000 in common stock in the acquisition of Wilson's
Supermarkets.
Disclosure of accounting policy
For the purposes of the Consolidated Statements of Cash Flows, the Company
considers all highly liquid debt instruments purchased with maturities of
three months or less to be cash items.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. NATURE OF BUSINESS
The Company and its subsidiaries are principally involved in the distribution
and retail sale of food, prescription drugs and related products through
supermarkets and combination stores. The Company's stores are located in
Maine, New Hampshire, Vermont, Massachusetts, upstate New York, North Carolina
and South Carolina.
B. PRINCIPLES OF CONSOLIDATION
The Company's fiscal year ends on the Saturday closest to December 31. The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries as of December 31, 1994, for fiscal year 1994 (52
weeks), January 1, 1994, for fiscal year 1993 (52 weeks) and January 2, 1993,
for fiscal year 1992 (53 weeks).
All significant intercompany accounts and transactions have been eliminated in
consolidation.
C. SHORT-TERM INVESTMENTS
Short-term investments are highly liquid investments with original maturities
of more than three months and are stated at cost which approximates fair
market value.
D. INVENTORIES
Inventories consist primarily of groceries, meat, produce, general merchandise
and pharmaceuticals. Grocery, pharmaceutical and general merchandise
inventories are valued at the lower of cost, determined on the last-in,
first-out (LIFO) method, or market. Approximately 86% of inventories were
valued using the LIFO method in 1994 and in 1993. Other inventories are
stated at the lower of cost (first-in, first-out) or market. The current cost
of groceries, general merchandise and pharmaceuticals exceeded the LIFO
valuation by $14,343,000 at December 31, 1994 and $14,805,000 at January 1,
1994.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
E. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets. Leasehold
interests and improvements are amortized on the straight-line method over the
shorter of estimated useful life or lease term. The costs of repairs and
maintenance are expensed as incurred; renewals and betterments are
capitalized. Upon sale or retirement, the cost and related accumulated
depreciation are eliminated from the respective accounts and any resulting
gain or loss is included in the results of operations. Property, plant and
equipment consists of the following:
AVERAGE
DEPRECIATION (In thousands)
RATE 1994 1993
2% Land and improvements $ 81,667 $ 55,699
3% Buildings 203,645 175,894
13% Furniture, fixtures and equipment 294,792 252,474
4% Leasehold interests and improvements 169,178 145,595
Construction in progress 6,193 16,789
755,475 646,451
Less accumulated depreciation
and amortization 251,534 208,845
$503,941 $437,606
F. STORE OPENING AND CLOSING COSTS
The noncapital expenditures incurred in opening new stores or remodelling
existing stores are expensed in the year in which they are incurred. When the
decision is made to close a store, the remaining investment in fixtures and
leasehold improvements is expensed over its remaining productive life. The
present value of any remaining liability under the lease, net of expected
sublease recovery, is also expensed on the same basis.
G. DEFERRED CHARGES, NET
Deferred charges consist of the following:
(In thousands)
1994 1993
Goodwill $ 78,075 $13,447
Acquisition costs 21,925 22,948
Other 1,548 2,021
$101,548 $38,416
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Goodwill, which represents the excess of costs of companies acquired over the
fair value of their net assets at dates of acquisition, is being amortized on
the straight-line method over various periods not exceeding 20 years. The
Company evaluates, on an ongoing basis, the carrying value of goodwill and
makes a specific provision when impairment is identified. Impairment would
include for an ongoing business, the inability to generate operating income
sufficient to cover the amortization of goodwill, and in management's
judgement, the business will not recover from this position. Impairment would
also be identified in the event of an unexpected loss on the sale of a
business. The Company has not recognized any provision for impairment of
goodwill.
Acquisition costs consist primarily of costs of obtaining new store sites,
covenants-not-to-compete, tradenames and initial direct lease costs. Costs of
obtaining new store sites, if ultimately developed, are capitalized and
depreciated over the estimated useful lives of the related assets. Other
intangible assets acquired in connection with acquisitions are being amortized
on the straight-line method over periods ranging from five to ten years.
Lease costs are being amortized on the straight-line method over the base
lease terms.
Amortization expense charged to operations for all deferred charges was
$8,016,000 in 1994, $5,787,000 in 1993 and $5,268,000 in 1992.
H. CAPITALIZED COMPUTER SOFTWARE COSTS
Capitalized computer software costs consist of costs to purchase and develop
software. The Company capitalizes internally developed software costs based
on a project-by-project analysis of each project's significance to the Company
and its estimated useful life. All capitalized software costs are amortized
on a straight-line method over a period of five years. Amortization expense
charged to operations was $3,085,000 in 1994, $3,116,000 in 1993 and
$3,251,000 in 1992.
I. CAPITALIZED INTEREST
The Company capitalizes interest as a part of the cost of acquiring and
constructing certain assets. Capitalized interest was $1,669,000 in 1994,
$1,530,000 in 1993 and $1,264,000 in 1992.
J. INCOME TAXES
The Company accounts for income taxes under the provisions of STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES (Note 9).
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
K. EARNINGS PER COMMON SHARE
Earnings per share of common stock have been determined by dividing net
earnings available to common shareholders by the weighted average number of
shares of common stock outstanding. The assumed exercise of existing employee
stock options has been excluded since it does not result in any material
dilution. Net earnings available to common shareholders is equal to net
earnings reduced by dividends paid of $74,000 in 1994, $220,000 in 1993 and
$278,000 in 1992 on redeemable preferred stock of a subsidiary.
L. FAIR VALUE DISCLOSURES ABOUT FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and cash items, short-term investments and notes receivable: The
carrying amounts reported in the balance sheet for these items
approximate their fair value.
Long-term debt: The fair values of the Company's long-term debt are
estimated using discounted cash flow analyses, based on the Company's
current incremental borrowing rates for similar types of borrowing
arrangements. The carrying amount of the Company's long-term debt,
including current maturities was approximately $168,100,000 at
December 31, 1994. The fair value of the long-term debt is estimated
to be $171,660,000 at December 31, 1994.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. EXTERNAL FINANCING
At December 31, 1994, the Company had revolving credit lines with several
banks totalling $50 million with interest rates determined by different
borrowing options including prime, quoted money market or LIBOR plus a
premium. At December 31, 1994, there were no outstanding borrowings under
these credit lines. The agreements provide for conversion of revolving credit
loans to term loans with principal payments due in quarterly installments over
a period of four years. The loan agreements contain certain restrictive
covenants, which among other provisions, require maintenance of certain levels
of working capital, debt and tangible net worth.
The lines require a commitment fee of from 1/4 to 3/8 of 1% on the unused
portion of the line. There are no compensating balances required during the
commitment period.
In addition, the Company had unused, uncommitted short-term lines of credit
with four banks totalling $28 million at December 31, 1994. Of this amount,
approximately $6.4 million is reserved to support outstanding standby letters
of credit which guarantee payment of certain insurance claims and premiums.
During 1994, the Company extinguished certain debt, collateralized by real
estate and equipment and held by insurance companies, totalling $17,190,000.
These loans had terms ranging from 7 to 26 years and interest rates between
8.75% and 13.7%. Also, during 1994, the Company made prepayments on certain
debt, collateralized by real estate and equipment, totalling $2,127,000.
These loans had terms ranging from 7 to 20 years and interest rates between
9.5% and 10.2%.
In December 1994, the Company received $25,000,000 in a senior
uncollateralized debt financing consisting of $15,000,000 of 8.54% notes due
in 2006 and $10,000,000 of 8.42% notes due in 2002. Principal payments vary
over the term of the loans and are due annually on November 15.
At December 31, 1994, real estate and equipment with a net book value of
approximately $95,987,000 was pledged as collateral for debt of approximately
$99,783,000.
Net interest expense was as follows:
(In thousands)
1994 1993 1992
Interest on debt $16,508 $17,249 $17,975
Capital lease interest 8,615 7,230 6,509
Capitalized interest (1,669) (1,530) (1,264)
23,454 22,949 23,220
Less interest income (2,094) (3,612) (2,509)
Interest expense, net $21,360 $19,337 $20,711
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Long-term debt consists of the following:
(In thousands)
1994 1993
Collateralized by equipment, due in varying
installments through 1999 with interest
from 6.3% to 10% $ 13,006 $ 18,991
Collateralized by real estate, due in
varying installments through 2011 with
interest from 7.55% to 10.35% 86,777 93,389
Collateralized by real estate with interest
at 13.7% in 1993. - 13,758
Sale-leasebacks of improved real estate
accounted for as financings, due in varying
installments through 2013 with interest from
13.2% to 14.1% 3,460 3,498
Uncollateralized senior notes due in varying annual
installments through 2006 with interest from
8.42% to 8.97%. 59,000 34,000
Uncollateralized note due in equal annual install-
ments through 1999 with interest at 6%. 4,500 -
Other 1,353 260
168,096 163,896
Less current portion 14,409 7,180
$153,687 $156,716
The uncollateralized senior note agreements contain certain restrictive
covenants, which among other provisions, require maintenance of certain levels
of debt and tangible net worth.
Maturities of long-term debt at December 31, 1994, are as follows:
(In thousands)
1995 $ 14,409
1996 12,537
1997 14,714
1998 15,605
1999 17,136
2000 and thereafter 93,695
$168,096
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
3. LEASED ASSETS AND LEASE COMMITMENTS
The Company's financial structure includes leases of certain stores, office
facilities, transportation vehicles and equipment. Initial lease terms range
from 5 to 45 years with the majority of lease terms between 20 and 25 years.
Substantially all leases contain renewal options. Certain leases contain a
provision for the payment of contingent rentals based on a percentage of sales
in excess of stipulated amounts. Most of the real estate leases provide that
the Company pay taxes, insurance and maintenance applicable to the leased
premises.
The Company's investment in real property under capital leases was as follows:
(In thousands)
1994 1993
Real property $76,552 $65,151
Less accumulated amortization 17,731 15,081
Net real property under capital leases $58,821 $50,070
Amortization of property under capital leases was $3,526,000 in 1994,
$3,132,000 in 1993 and $3,001,000 in 1992.
Future minimum rental payments under capital lease obligations and operating
leases at December 31, 1994, are as follows:
(In thousands)
Capital Operating
Leases Leases
1995 $ 11,015 $ 11,417
1996 10,929 10,202
1997 11,028 9,095
1998 11,011 8,329
1999 11,204 8,383
2000 and thereafter 135,413 90,618
Total minimum lease payments 190,600 138,044
Less:
Imputed interest (at rates
from 6.50% to 21.13%) 119,662
Estimated executory costs 4
Present value of net mini-
mum lease payments 70,934
Less current obligations 1,382
Long-term obligations $ 69,552
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Minimum payments for capital and operating leases have not been reduced by
minimum sublease rentals of $114,000 and $1,390,000, respectively, due in the
future under noncancellable subleases. They also do not include contingent
rentals that may be payable under certain leases.
Total rent expense, net of executory costs, was as follows:
(In thousands)
1994 1993 1992
Capital leases:
Contingent rentals $ 379 $ 650 $ 727
Operating leases:
Minimum rentals 11,578 12,409 13,114
Contingent rentals 291 435 470
Rentals from subleases (344) (344) (140)
11,525 12,500 13,444
$11,904 $13,150 $14,171
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. ACQUISITION OF WILSON'S SUPERMARKETS
In July 1994, the Company acquired Boney Wilson & Sons, Inc. (Wilson's) and
the majority of assets owned by Wilson Brothers Partnership, a partnership
which owned certain real estate, the majority of which was leased to Wilson's
and used in the ordinary course of business. Wilson's operates 20
supermarkets in southeastern North Carolina and northeastern South Carolina.
The purchase also included sites for additional supermarkets, one of which was
opened in September 1994, and two of which are under construction.
The acquisition has been accounted for as a purchase, and accordingly the
assets acquired and liabilities assumed have been recorded at their estimated
fair values on the date of acquisition. The total cost of the acquisition,
including assumed liabilities was $126,739,000, which exceeded the fair value
of the acquired net assets by $67,160,000. The excess has been recorded as
goodwill and amortized utilizing the straight line method over 20 years.
Included within the assets acquired was $3,947,000 of cash and $4,570,000 of
cash advances to certain wholesalers.
Proforma unaudited results of operations of the Company, assuming the
acquisition had occurred on January 1, 1994, and January 2, 1993, are as
follows:
Unaudited
(In thousands except per share data) 1994 1993
Net sales $2,385,837 $2,242,741
Earnings before cumulative effect
of change in accounting principle $ 63,124 $ 56,907
Net earnings $ 63,124 $ 59,007
Per share of common stock:
Earnings before cumulative effect
of change in accounting principle $ 1.52 $ 1.38
Cumulative effect of change in
accounting principle -- .05
Net earnings $ 1.52 $ 1.43
The foregoing proforma data is not necessarily indicative of what would have
occurred had the acquisition been consummated at the beginning of each year,
nor of future operations of the combined companies.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
5. SALE OF WELLBY SUPER DRUG STORES AND RESTRUCTURING CHARGES
In May 1992, the Company sold the majority of its stores in the Wellby Super
Drug store chain for $29,814,000 resulting in a gain of $4,556,000. The drug
stores represented less than 5% of the total sales and other revenues of the
Company, and the divestiture did not have a material impact on 1992 net
earnings.
Also in July 1992, the Company offered special early retirement and voluntary
resignation programs to reduce expenses. The charges associated with these
programs were $4,012,000. These charges, when combined with the gain on the
sale of the Wellby Super Drug store chain, generated a net gain of $544,000.
This amount was included as a reduction of 1992 selling, general and
administrative expenses.
6. CAPITAL STOCK
In February 1988, an existing "standstill" agreement with certain shareholders
("the Sobey Parties") was amended and extended to December 31, 1992. This
agreement contains a provision for five one-year extensions provided that
neither party notifies the other at least five months in advance of a
scheduled termination date of its desire to terminate the agreement. Since
neither party gave such written notice, the term of the agreement has been
automatically extended to December 31, 1995. Pursuant to the terms of the
agreement, the Sobey Parties have agreed, among other things, not to increase
their percentage ownership of the Company's voting stock above 25.6%, except
in certain circumstances specified by the agreement. Under the agreement,
whenever the Company issues shares of voting stock to third parties, the Sobey
Parties generally have the right to purchase sufficient shares from the
Company to maintain a 25.6% level of ownership. Since 1992 the Company has
issued to the Sobey Parties the following shares of common stock pursuant to
their purchase rights under the agreement: 1994, 143,316 shares; 1993,
126,803 shares; and 1992, 150,906 shares. All sales to the Sobey Parties
pursuant to the standstill agreement have been made at market prices.
In February 1988, the Company declared a dividend of one preferred stock
purchase right (a "Right") for each outstanding share of common stock.
Pursuant to the Rights agreement each share of common stock issued subsequent
to the dividend declaration date will carry with it a Right. Each Right
entitles its holder to purchase, under certain circumstances, one
one-hundredth of a share of Series A Junior Participating Preferred Stock of
the Company at an exercise price of $125, subject to certain adjustments, or
under other circumstances, common stock or other securities and/or assets.
Such Rights are not currently exercisable and expire February 4, 1998. The
Rights become exercisable upon the occurrence of certain events and are
redeemable by the Company under certain circumstances, all as described in the
Rights agreement.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
7. PENSION PLANS
The majority of the employees of the Company participate in non-contributory,
defined benefit pension plans. The plans provide benefits based on the
participants' years of service and compensation in later years or stated
amounts for each year of service. The Company only funds amounts deductible
for federal income tax purposes.
Net pension cost included the following components:
(In thousands)
1994 1993 1992
Service cost - benefits earned
during the year $ 4,547 $ 3,197 $ 3,203
Interest cost on projected
benefit obligation 4,882 3,993 3,472
Actual return on plan assets (682) (5,229) (3,650)
Net amortization and deferral (3,670) 1,454 382
Net pension cost before special items 5,077 3,415 3,407
Sale of Wellby Super Drug stores - - (517)
Early retirement program - - 1,304
Net pension cost $ 5,077 $ 3,415 $ 4,194
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The following sets forth the funded status and amounts recognized in the
Company's consolidated balance sheets at December 31, 1994 and January 1,
1994:
(In thousands)
1994 1993
Actuarial present value of
benefit obligations:
Vested benefit obligation $43,340 $43,387
Accumulated benefit obligation $44,756 $45,668
Projected benefit obligation $62,041 $65,863
Plan assets, at fair value, consisting of
equities, fixed-income securities, real
estate and cash and cash equivalents 56,894 52,351
Plan assets less than
projected benefit obligation 5,147 13,512
Unrecognized net asset
at transition 440 485
Unrecognized net loss (5,254) (12,512)
Unrecognized prior service cost (2,160) (2,353)
Prepaid pension cost $(1,827) $ (868)
The actuarial valuation was calculated using the Projected Unit Credit Cost
Method. The increase in the plans' liabilities is primarily due to a change
in actuarial assumptions.
Assumptions used in determining the funded status of the pension plans are as
follows:
1994 1993
Discount rate 8.0% 7.5%
Average rate of increase in compensation levels 4.5% 4.5%
Expected long-term rate of return on assets 9.0% 8.5%
The Company also administers certain defined contribution plans for eligible
employees and a supplemental executive retirement plan. The cost of these
plans was not significant.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
8. EMPLOYEE STOCK PLANS
The 1985 Incentive Stock Option Plan and the 1988 Stock Plan provide for the
granting to officers and other key employees options to purchase common stock
at 100% of the market price on the date of grant. The 1988 Stock Plan allows
the granting of both incentive stock options and non-qualified stock options.
Under the Incentive Stock Option Plans, options for 50% of any grant are
exercisable after one year and the remainder after two years. Non-qualified
options may have various vesting schedules, but generally none are exercisable
until one year following the grant. All options may be exercised for cash or
by exchanging currently owned shares, or both. Under the 1988 Plan, exchanged
shares may be regranted as non-qualified options. Original option grants
expire from seven to ten years from the date of grant. Non-qualified stock
option activity was not material. Incentive stock option activity for the
fiscal years ended December 31, 1994 and January 1, 1994, was as follows:
1994 1993
Shares Option Price Shares Option Price
Outstanding at
beginning of year 986,720 $10.59-22.63 885,049 $ 9.22-22.63
Granted 367,501 21.63-23.38 247,504 22.25
Exercised (142,361) 10.59-22.63 (115,423) 9.22-22.63
Cancelled (23,788) 10.59-22.63 (30,410) 13.50-22.63
Outstanding at end
of year 1,188,072 10.59-23.38 986,720 10.59-22.63
Exercisable at end
of year 718,628 10.59-22.63 653,339 10.59-22.63
Available for future
grants 222,257 - 950,292 -
The 1982 Employee Stock Purchase Plan enables participating employees to
purchase common stock through payroll deduction of up to 5% of eligible
compensation. The Company pays interest on the accumulated withholdings.
These amounts may be used to purchase shares of company stock at the option
price (lesser of: (a) 85% of the fair market value at the date of grant or (b)
the greater of the market price at the close of business on the exercise date
or $10.00 per share). During 1994, employees purchased 102,171 shares, for
which $1,781,000 was paid to the Company. As of December 31, 1994, grants had
been exercised by employees for the purchase of 95,119 shares. As of February
1995, $1,880,000 had been received by the Company upon issuance of these
shares. All shares issued under this Plan are from previously unissued
reserves. At December 31, 1994, 402,778 shares remain available for issuance
under the Plan.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9. INCOME TAXES
In 1993, The Company changed its method of accounting for income taxes from
the deferred method to the liability method required by STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES (the Statement).
Under the liability method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Prior to the adoption
of the Statement, income tax expense was determined using the deferred method.
Under this method, deferred tax expense was based on items of income and
expense reported in different years of the financial statements and tax
returns and was measured using the tax rate in effect in the year the
difference originated.
As permitted by the Statement, the Company elected not to restate the
financial statements of any prior periods, the impact of which would not be
material. The cumulative effect of adopting the Statement for periods prior
to January 3, 1993 is $2.1 million or $.05 per share and is shown separately
in the Consolidated Statement of Earnings for 1993. The change did not impact
pretax income in 1993.
Significant components of the Company's deferred tax assets and liabilities
for the fiscal years ended December 31, 1994 and January 1, 1994 were as
follows:
(In thousands)
1994 1993
Deferred Tax Liabilities:
Depreciation and amortization $32,113 $31,877
Other 2,325 1,894
34,438 33,771
Deferred Tax Assets:
Capital leases (5,072) (4,350)
Insurance reserves (9,742) (9,918)
Employee benefit plans (3,576) (2,342)
Other (1,681) (1,328)
(20,071) (17,938)
14,367 15,833
Net current deferred tax assets 7,519 7,920
Net non-current deferred tax liabilities $21,886 $23,753
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The Company expects to realize the deferred tax assets in the ordinary course
of business operations in subsequent years, and, accordingly, has not
established a valuation reserve relative to these amounts.
The components of the provision for income taxes were as follows:
(In thousands)
Deferred
Liability Method Method
1994 1993 1992
Current
Federal $34,585 $29,118 $27,848
State 9,100 6,732 7,390
43,685 35,850 35,238
Deferred
Federal (1,209) 842 (1,591)
State (416) 886 (1,171)
(1,625) 1,728 (2,762)
Total income tax expense $42,060 $37,578 $32,476
The components of the provision for deferred income tax expense for 1992 were
as follows:
(In thousands)
1992
Depreciation $ 931
Insurance reserves (2,037)
Other (1,656)
$(2,762)
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The reconciliation of income tax computed at the United States Federal
statutory tax rates to income tax expense is:
(In thousands)
Deferred
Liability Method Method
1994 1993 1992
Amount Percent Amount Percent Amount Percent
Tax at U.S.
statutory rate $36,522 35.00% $32,264 35.00% $27,768 34.00%
State income taxes,
net of federal tax
benefit 5,645 5.41 4,973 5.39 4,104 5.02
Other - net (107) (.10) 341 .37 604 .74
$42,060 40.31% $37,578 40.76% $32,476 39.76%
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10. RETIREE INSURANCE BENEFITS
The Company provides certain health care and life insurance benefits for
retired employees. Generally, employees became eligible for these benefits if
they retired in accordance with the Company's established retirement policy.
The Company has reserved the right to modify or terminate these plans.
Effective January 3, 1993, the Company adopted SFAS NO. 106 - EMPLOYERS'
ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. This Statement
generally requires the Company to accrue the cost of retiree health and other
postretirement benefits during the working careers of active employees. The
Company elected the prospective transition approach and is amortizing the
transition obligation on a straight-line basis over a 20-year period. The
impact of this change on fiscal years 1994 and 1993 and the pro forma effect
on fiscal year 1992 was not material.
The following sets forth the plan's status at December 31, 1994 and January 1,
1994:
(In thousands)
1994 1993
Accumulated postretirement benefit obligation (APBO):
Retirees $ 7,403 $ 9,098
Actives - eligible to retire 461 340
Actives - not eligible to retire 1,230 1,710
Total APBO 9,094 11,148
Plan assets at fair value 0 0
Accumulated postretirement benefit obligation
in excess of plan assets 9,094 11,148
Unrecognized transition obligation (9,952) (10,505)
Unrecognized net gain 1,918 -
Accrued postretirement benefit liability $ 1,060 $ 643
Net periodic postretirement benefit cost for 1994
and 1993 included the following components:
Service Cost $ 82 $ 117
Interest Cost 686 901
Amortization of transition obligation
over 20 years 497 553
Net periodic postretirement benefit cost $ 1,265 $ 1,571
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
An 8% annual rate of increase in the per capita costs of covered health care
benefits was assumed for 1995, gradually decreasing to 5% by the year 2003.
Increasing the assumed health care cost trends by one percentage point in each
year would increase the accumulated post retirement benefit obligation as of
December 31, 1994 by $0.8 million and increase the aggregate of the service
cost and interest cost components of net periodic postretirement benefit cost
for fiscal 1994 by $0.1 million. Discount rates of 8.0% and 7.5% were used to
determine the accumulated postretirement benefit obligation in 1994 and 1993,
respectively.
<PAGE>
<TABLE>
<CAPTION>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
11. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a presentation of selected financial data for each of the four quarters of fiscal years 1994, 1993
and 1992. During 1993, the Company adopted SFAS NO. 109 - ACCOUNTING FOR INCOME TAXES (Note 9). The cumulative effect of
this adjustment, which increased net earnings by $2,100,000, is reflected in the first quarter of 1993. Fourth Quarter
1992 results are for 14 weeks of operations while all other quarters presented are for 13 weeks. In addition, Fourth
Quarter 1992 includes a LIFO credit of $1,865,000 (before income taxes) primarily due to a decrease in inventory levels
and a change to management's estimated inflation during the first three quarters of the year.
(In thousands except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1994
<S> <C> <C> <C> <C>
Sales and other revenues...... $519,078 $538,216 $622,554 $611,907
Gross margin...................... 125,745 134,132 151,612 151,767
Net earnings...................... 11,059 15,409 19,102 16,718
Per common share............. $ .27 $ .37 $ .46 $ .40
Weighted average common shares
outstanding..................... 41,316 41,463 41,655 41,745
1993
Sales and other revenues...... $490,565 $517,974 $530,064 $516,286
Gross margin...................... 121,534 129,462 133,125 126,836
Net earnings...................... 11,869 14,486 16,000 14,350
Per common share............. $ .29 $ .35 $ .39 $ .35
Weighted average common shares
outstanding..................... 40,859 41,044 41,121 41,175
1992
Sales and other revenues...... $486,769 $512,475 $526,438 $540,341
Gross margin...................... 121,281 126,813 131,606 134,168
Net earnings...................... 8,812 12,578 14,432 13,372
Per common share............. $ .22 $ .31 $ .35 $ .33
Weighted average common shares
outstanding..................... 40,275 40,473 40,602 40,715
</TABLE>
<PAGE>
ITEM 9: DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This item, except for certain information relating to Executive
Officers included in Part I, is incorporated by reference to the
Registrant's definitive proxy statement for the Annual Meeting of
Shareholders to be held on May 24, 1995.
ITEM 11. EXECUTIVE COMPENSATION
This item is incorporated by reference to the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders to be held on
May 24, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This item is incorporated by reference to the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders to be held on
May 24, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This item is incorporated by reference to the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders to be held on
May 24, 1995.
<PAGE>
Part IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report:
(a) 1., 2. Consolidated Financial Statements and Related
Schedules PAGES
Report of Independent Accountants............................. 24
Consolidated Balance Sheets - December 31, 1994 and
January 1, 1994............................................ 25-26
Consolidated Statements of Earnings - Fiscal Years Ended,
December 31, 1994, January 1, 1994 and January 2, 1993..... 27
Consolidated Statements of Changes in Shareholders'
Equity - Fiscal Years Ended, December 31, 1994,
January 1, 1994, and January 2, 1993....................... 28
Consolidated Statements of Cash Flows
- Fiscal Years Ended, December 31, 1994,
January 1, 1994, and January 2, 1993....................... 29-30
Notes to Consolidated Financial Statements.................... 31-49
Schedules I, II, III and IV are not included as they are not applicable.
3. Exhibits Required by Item 601 of Regulation S-K
SEQUENTIAL
PAGE NUMBER
IN ORIGINAL 10-K
3.1 - Articles of Incorporation
Incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 (SEC File
No. 1-7603).
3.2 - By-Laws of the Registrant
Incorporated by reference to Exhibit 3.2 to the
<PAGE>
PAGES
Registrant's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 (SEC File
No. 1-7603).
4.1 - Instruments Defining the Rights of Included in
Security Holders Exhibit 3
4.2 - There are incorporated herein by reference a (i) Rights
Agreement dated as of February 4, 1988 between the
Registrant and The First National Bank of Boston, as Rights
Agent, a copy of which was filed as Exhibit 2 to the
Registrant's Current Report on Form 8-K, dated February 16,
1988 (SEC File No. 1-7603) and (ii) an Appointment and
Amendment Agreement dated September 22, 1992 to said Rights
Agreement, substituting Continental Stock Transfer & Trust
Company as Rights Agent, a copy of which was filed as
Exhibit 4.3 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended January 2, 1993 (SEC File No. 1-
7603).
10.1 - There are incorporated herein by reference (i) an Amended
and Restated Agreement, dated as of February 4, 1988, among
the Registrant and various Sobey Parties, a copy of which
was filed as Exhibit 1 to the Registrant's Current Report on
Form 8-K, dated February 16, 1988 (SEC File No. 1-7603) and
(ii) an Amendment Agreement dated as of January 1, 1992 to
said Agreement with the Sobey Parties, substituting certain
Sobeys Inc. employee benefit plans as parties thereto, a
copy of which was filed as Exhibit 10.2 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
NOTE: Compensatory plans and arrangements and management contracts are
filed as Exhibits 10.2 through 10.29 below.
10.2 - There are incorporated herein by reference (i) the amended
and restated Hannaford Bros. Co. Employees' Retirement Plan,
a copy of which was filed as Exhibit 10.4 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993 (SEC File No. 1-7603) and (ii) the
First Amendment to the Hannaford Bros. Co. Employees'
Retirement Plan, effective on or before January 1, 1994, a
copy of which was filed as Exhibit 10.4 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
1, 1994 (SEC File No. 1-7603).
<PAGE>
PAGES
10.3 - Second Amendment to the Hannaford Bros. Co. Employees' 59-69
Retirement Plan, effective on or after January 1, 1994.
10.4 - There is incorporated herein by reference the amended and
restated Supplemental Executive Retirement Plan, a copy of
which was filed as Exhibit 10.5 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 2,
1993 (SEC File No. 1-7603).
10.5 - First Amendment to the Hannaford Bros. Co. Supplemental 70
Executive Retirement Plan, effective June 1, 1994.
10.6 - Amended and restated Hannaford Bros. Co. Employee 71-78
Stock Purchase Plan, effective October 19, 1994.
10.7 - There are incorporated herein by reference (i) the
Registrant's 1985 Incentive Stock Option Plan, a copy of
which was filed as Exhibit 4.3 to the Registrant's
Registration Statement on Form S-8 (Registration No.
2-98387); (ii) a First Amendment to said Plan, a copy of
which was filed as Exhibit 10.11 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 2,
1988 (SEC File No. 1-7603); and (iii) a Second Amendment to
said Plan, a copy of which was filed as Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 (SEC File No. 1-7603).
10.8 - There are incorporated herein by reference (i) the
Registrant's 1993 Long Term Incentive Plan, effective
January 3, 1993, a copy of which was filed as Exhibit 10.8
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 (SEC File No. 1-7603) and
(ii) the First Amendment to the Registrant's 1993 Long Term
Incentive Plan, effective January 2, 1994, a copy of which
was filed as Exhibit 10.9 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 1, 1994 (SEC
File No. 1-7603).
10.9 - There are incorporated herein by reference (i) the
Registrant's 1980 Long Term Incentive Plan, a copy of which
was filed as Exhibit 10B to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 3, 1981 (SEC
File No. 1-7603); (ii) an Amendment to said Plan, a copy of
which was filed as Exhibit 10.15 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 3,
<PAGE>
PAGES
1987 (SEC File No. 1-7603); (iii) the Second Amendment to
said Plan, a copy of which was filed as Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1988 (SEC File No. 1-7603); (iv) the Third
Amendment to said Plan, a copy of which was filed as Exhibit
10.14 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1988 (SEC File No. 1-7603); (v)
the Fourth Amendment to said Plan, a copy of which was filed
as Exhibit 10.10 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 29, 1990 (SEC File
No. 1-7603); and (vi) the Fifth Amendment to said Plan, a
copy of which was filed as Exhibit 10.7 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 28, 1991 (SEC File No. 1-7603).
10.10 - There are incorporated herein by reference (i) the
Registrant's Annual Incentive Plan, a copy of which was
filed as Exhibit 10.19 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1988 (SEC
File No. 1-7603) and (ii) a First Amendment to said Plan, a
copy of which was filed as Exhibit 10.12 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1990 (SEC File No. 1-7603).
10.11 - There are incorporated herein by reference (i) an Employment
Continuity Agreement between the Registrant and James L.
Moody, Jr., a copy of which was filed as Exhibit 10.13 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 (SEC File No. 1-7603) and (ii)
an Amendment to said Agreement, dated April 28, 1992, a copy
of which was filed as Exhibit 10.11 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.12 - Second Amendment to an Employment Continuity Agreement 79
between the Registrant and James L. Moody, Jr., dated March
13, 1995.
10.13 - There are incorporated herein by reference (i) an Employment
Continuity Agreement between the Registrant and Hugh G.
Farrington, a copy of which was filed as Exhibit 10.14 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 (SEC File No. 1-7603) and (ii)
an Amendment to said Agreement, dated April 28, 1992, a copy
of which was filed as Exhibit 10.13 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.14 - Second Amendment to an Employment Continuity Agreement 80
between the Registrant and Hugh G. Farrington, dated March
13, 1995.
<PAGE>
PAGES
10.15 - There are incorporated herein by reference (i) a standard
form of Employment Continuity Agreement between the
Registrant and various of its executive officers, a copy of
which was filed as Exhibit 10.15 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 29,
1990 (SEC File No. 1-7603) and (ii) Amendment to Form of
said Agreement, dated April 28, 1992, a copy of which was
filed as Exhibit 10.13 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993 (SEC
File No. 1-7603).
10.16 - Second Amendment to a standard form of Employment Continuity 81
Agreement between the Registrant and various of its executive
officers.
10.17 - There is incorporated herein by reference a standard form
Deferred Compensation Agreement available to outside
directors of the Registrant, a copy of which was filed as
Exhibit 10.2 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 29, 1984 (SEC File No.
1-7603).
10.18 - There is incorporated herein by reference the Amended and
Restated Savings and Investment Plan of the Registrant, a
copy of which was filed as Exhibit 10.17 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.19 - First Amendment to the Amended and Restated Savings & 82-89
Investment Plan of the Registrant, effective on or after
January 1, 1994.
10.20 - There are incorporated herein by reference (i) the
Registrant's Amended and Restated Deferred Compensation Plan
available to certain management employees of the Registrant,
a copy of which was filed as Exhibit 10.24 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1988 (SEC File No. 1-7603) and (ii) the
First Amendment to the Amended and Restated Deferred
Compensation Plan, adopted October 11, 1993, a copy of which
was filed as Exhibit 10.18 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 1, 1994 (SEC
File No. 1-7603).
10.21 - There is incorporated herein by reference a standard form of
Deferred Compensation Agreement available to certain
management employees pursuant to the Registrant's Amended
and Restated Deferred Compensation Plan, a copy of which was
filed as Exhibit 10.19 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993 (SEC
File No. 1-7603).
<PAGE>
PAGES
10.22 - There are incorporated herein by reference (i) the
Registrant's 1988 Stock Plan, a copy of which was filed as
Exhibit 4.3 to the Registrant's Registration Statement on
Form S-8 (Registration No. 33-22666); (ii) the First
Amendment to said Plan, a copy of which was filed as Exhibit
10.23 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (SEC File No. 1-7603);
(iii) the Second Amendment to said Plan, a copy of which was
filed as Exhibit 10.18 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 1991 (SEC
File No. 1-7603); (iv) the Third Amendment to the
Registrant's 1988 Stock Plan, effective January 3, 1993, a
copy of which was filed as Exhibit 10.21 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
1, 1994 (SEC File No. 1-7603); and (v) the Fourth Amendment
to the Registrant's 1988 Stock Plan, effective January 1,
1994, a copy of which was filed as Exhibit 10.22 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994 (SEC File No. 1-7603).
10.23 - Fifth Amendment to the Registrant's 1988 Stock Plan, 90
effective January 1, 1994.
10.24 - There are incorporated herein by reference (i) a Retirement
Plan for Outside Directors of the Registrant, effective
December 30, 1990, a copy of which was filed as Exhibit
10.25 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (SEC File No. 1-7603)
and (ii) the First Amendment to said Plan, a copy of which
was filed as Exhibit 10.21 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 28, 1991
(SEC File No. 1-7603).
10.25 - There are incorporated herein by reference (i) an Agreement,
dated February 11, 1991, between the Registrant and James L.
Moody, Jr., a copy of which was filed as Exhibit 10.26 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990 (SEC File No. 1-7603) and (ii)
an Amendment to said Agreement, dated May 14, 1992, a copy
of which was filed as Exhibit 10.24 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993 (SEC File No. 1-7603).
10.26 - There is incorporated herein by reference a letter agreement
between the Registrant and Norman E. Brackett, dated
September 9, 1992, a copy of which was filed as Exhibit
10.25 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 (SEC File No. 1-7603).
<PAGE>
PAGES
10.27 - There is incorporated herein by reference a letter agreement
between the Registrant and Roger W. Hoyt, dated September 9,
1992, a copy of which was filed as Exhibit 10.26 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993 (SEC File No. 1-7603).
10.28 - Letter Agreement between the Registrant and Roger W. Hoyt, 91-92
dated June 1, 1994.
10.29 - Letter Agreement between the Registrant and Roger W. Hoyt, 93-94
dated August 15, 1994.
21 - Subsidiaries of the Registrant............................ 95
23 - Consents of Accountants................................... 96
27 - Financial Data Schedule 97
(b) No reports on Form 8-K were filed during the last quarter of
the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HANNAFORD BROS. CO.
s/Norman E. Brackett
Norman E. Brackett
Sr. Vice President, Chief
Financial Officer
(Principal Financial Officer)
March 8, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
s/James L. Moody, Jr. s/Laurel Cutler s/David F. Sobey
James L. Moody, Jr. Laurel Cutler David F. Sobey
Chairman of the Board Director Director
Director March 8, 1995 March 8, 1995
March 8, 1995
s/Walter J. Salmon s/Robert L. Strickland
s/Norman E. Brackett Walter J. Salmon Robert L. Strickland
Norman E. Brackett Director Director
Sr. Vice President, March 8, 1995 March 8, 1995
Chief Financial Officer
(Principal Accounting Officer)
March 8, 1995
s/Richard K. Lochridge
Richard K. Lochridge Claudine B. Malone
s/Hugh G. Farrington Director Director
Hugh G. Farrington March 8, 1995
President
Chief Executive Officer
Director
March 8, 1995 s/Robert D. Bolinder
Robert D. Bolinder William A. Andres
Director Director
s/Bruce G. Allbright March 8, 1995
Bruce G. Allbright
Director
March 8, 1995 s/William T. End s/James W. Gogan
William T. End James W. Gogan
Director Director
March 8, 1995 March 8, 1995
Exhibit 10.3
SECOND AMENDMENT
TO THE
HANNAFORD BROS. CO. EMPLOYEES' RETIREMENT PLAN
The Hannaford Bros. Co. Employees' Retirement Plan (the "Plan") was
last amended and restated effective January 1, 1993. The Plan was
thereafter amended as of the same date and is hereby further amended in the
following respects:
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Section 1.11 is hereby amended to read as follows:
"1.11 'Compensation' shall mean the basic compensation paid,
before any reduction pursuant to a deferral election under the
Hannaford Bros. Co. Savings and Investment Plan or a benefit election
under the Hannaford Bros. Co. Flexible Benefits Plan, to a Participant
by an Employer, excluding reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred
compensation, welfare benefits, unguaranteed overtime pay, bonuses and
other irregular payments.
Notwithstanding the preceding sentence to the contrary, for
benefits accruing in Plan Years beginning on or after January 1, 1989,
the annual Compensation of any Participant in excess of Two Hundred
Thousand Dollars ($200,000), or such higher amount as the Secretary of
the Treasury may prescribe, shall not be taken into account under the
Plan; and for benefits accruing in Plan Years beginning on or after
January 1, 1994, the annual Compensation of any Participant in excess
of One Hundred Fifty Thousand Dollars ($150,000), or such higher amount
as the Secretary of the Treasury may prescribe, shall not be taken into
account under the Plan. In the event Compensation is determined for a
period which contains fewer than twelve (12) calendar months, the
annual Compensation limit shall be an amount equal to the annual
Compensation limit for the calendar year in which the period begins
multiplied by a fraction, the numerator of which is the number of
calendar months in the period and the denominator of which is twelve
(12). For purposes of the annual Compensation limit, any Compensation
paid to a Participant who is the spouse or a lineal descendant (who has
not attained age nineteen (19) by the close of the Plan Year) of a
Participant who is a Five Percent Owner or one of the ten (10) highly
compensated employees (within the meaning of Section 414(q) of the
Code) paid the highest compensation (as defined in Section 13.07) for
the Plan Year shall be treated as paid to or on behalf of such Five
Percent Owner or highly compensated employee. If the annual
Compensation limit is exceeded as a result of the application of
<PAGE>
the preceding sentence, then (except for purposes of determining the
portion of Compensation not in excess of Covered Compensation) the
limitation shall be prorated among the affected Participants'
Compensation, as determined prior to the application of the annual
Compensation limit.
The rules of this paragraph are effective January 1, 1994. If the
Secretary of the Treasury increases the annual Compensation limit for a
calendar year, the increased limit shall apply to any period beginning
in such calendar year over which Compensation is determined
("determination period"). If Compensation for a prior determination
period is taken into account for a determination period beginning on or
after January 1, 1994, such Compensation shall be subject to the annual
Compensation limit (determined under this Section) in effect for such
prior determination period. For purposes of this paragraph, the annual
Compensation limit is $150,000 for determination periods beginning
before January 1, 1994.
Effective January 1, 1994, the Accrued Benefit of a Section
401(a)(17) Participant shall be equal to the greater of:
(a) the Participant's Accrued Benefit based on his or her
Average Annual Compensation, Covered Compensation and Years of
Benefit Service as of the date such benefit is determined; or
(b) the sum of:
(i) the Participant's Accrued Benefit based on his or
her Average Annual Compensation, Covered Compensation and
Years of Benefit Service as of December 31, 1993, determined
under the terms of the Plan in effect on that date; and
(ii) the Participant's Accrued Benefit based on his or
her Average Annual Compensation, Covered Compensation and
Years of Benefit Service (disregarding Years of Benefit
Service prior to January 1, 1994), determined under the
benefit formula set forth in Section 4.01.
'Section 401(a)(17) Participant' means a Participant whose Accrued
Benefit determined on or after January 1, 1994, is based on Annual
Compensation for a period beginning before that date in excess of One
Hundred Fifty Thousand Dollars ($150,000). In the event the Plan is
amended after January 1, 1994, to add an optional form of benefit
(within the meaning of Treasury Regulation Section 1.401(a)(4)-4(e)),
such benefit, if subsidized, shall not available to a Section
401(a)(17) Participant."
<PAGE>
3. Article I is hereby amended by redesignating Sections 1.22 through
1.57 as Sections 1.23 through 1.58, and by adding a new Section 1.22 to read
as follows:
"1.22 'Finance Committee' shall mean the Finance Committee of the
Board of Directors."
4. Article I is hereby amended by deleting Section 1.26 (redesignated
herein as Section 1.27) in its entirety and by redesignating Sections 1.27
through 1.57 (redesignated herein as Sections 1.28 through 1.58) as Sections
1.27 through 1.57.
5. Section 1.27 is hereby amended to read as follows:
"1.27 'Investment Manager' shall mean any fiduciary (other than
the Trustee or a named fiduciary as defined in Section 402(a)(2) of
ERISA):
(a) who is appointed by the Finance Committee to manage,
acquire, or dispose of all or any portion of the Trust Fund;
(b) who (i) is registered as an investment adviser under the
Investment Advisers Act of 1940; (ii) is a bank, as defined in
said Act; or (iii) is an insurance company qualified to manage,
acquire, or dispose of all or any portion of the Trust Fund under
the laws of more than one State; and
(c) who has acknowledged, in writing, that he or she is a
fiduciary with respect to the Plan."
6. Section 1.50 is hereby amended to read as follows:
"1.50 'Trustee' shall mean the bank, trust company or individuals
appointed by the Finance Committee to serve as the trustee of the
Trust."
7. Section 4.02 is hereby amended to read as follows:
"4.02 BENEFITS FOR CERTAIN WAREHOUSE PARTICIPANTS. The benefits
payable to or in respect of Warehouse Participants who retire or
separate from service before March 20, 1994, shall be determined in
accordance with the terms of the Plan as in effect on the date of each
such Participant's retirement or separation from service.
(a) The benefits payable to or in respect of Warehouse
Participants who retire or separate from service on or after March
20, 1994, shall be determined as follows:
(i) NORMAL RETIREMENT BENEFIT. A Warehouse
Participant who retires or is deemed to retire on his or her
Normal Retirement Date shall be entitled to receive a monthly
<PAGE>
retirement benefit ("Normal Retirement Benefit") equal to the
amount determined by multiplying the number of such Warehouse
Participant's Years of Benefit Service determined as of his
or her Normal Retirement Date by Twenty-Nine Dollars
($29.00).
(ii) EARLY RETIREMENT BENEFIT. A Warehouse
Participant who retires on an Early Retirement Date shall be
entitled to receive a monthly retirement benefit ("Early
Retirement Benefit") equal to the amount determined by
multiplying the number of such Warehouse Participant's Years
of Benefit Service determined as of his or her Early
Retirement Date by Twenty-Nine Dollars ($29.00).
The amount determined in accordance with this subsection
(ii) shall be reduced by 0.5952 of 1% for each month by which
the commencement of such Warehouse Participant's Early
Retirement Benefit precedes the first day of the month
coinciding with or next following his or her Normal
Retirement Date.
(iii) DEFERRED RETIREMENT BENEFIT. A Warehouse
Participant who retires or is deemed to retire on a Deferred
Retirement Date shall be entitled to receive a monthly
retirement benefit ("Deferred Retirement Benefit") equal to
the amount determined by multiplying the number of such
Warehouse Participant's Years of Benefit Service determined
as of his or her Deferred Retirement Date by Twenty-Nine
Dollars ($29.00).
(iv) VESTED BENEFIT. Effective January 1, 1989, a
Terminated Warehouse Participant who is credited with at
least five (5) Years of Vesting Service shall be entitled to
a monthly retirement benefit ("Vested Benefit") equal to the
amount determined by multiplying the number of such Warehouse
Participant's Years of Benefit Service determined as of his
or her Termination of Employment Date by Twenty-Nine Dollars
($29.00).
The amount determined in accordance with this subsection
(iv) shall be reduced by 0.5952 of 1% for each month by which
the commencement of such Warehouse Participant's Vested
Benefit precedes the first day of the month coinciding with
or next following his or her Normal Retirement Date.
(b) The benefits payable to or in respect of Warehouse
Participants who retire or separate from service on or after
February 17, 1996, shall be determined as follows:
(i) NORMAL RETIREMENT BENEFIT. A Warehouse
Participant who retires or is deemed to retire on his or her
<PAGE>
Normal Retirement Date shall be entitled to receive a monthly
retirement benefit ("Normal Retirement Benefit") equal to the
amount determined by multiplying the number of such Warehouse
Participant's Years of Benefit Service determined as of his
or her Normal Retirement Date by Thirty Dollars ($30.00).
(ii) EARLY RETIREMENT BENEFIT. A Warehouse
Participant who retires on an Early Retirement Date shall be
entitled to receive a monthly retirement benefit ("Early
Retirement Benefit") equal to the amount determined by
multiplying the number of such Warehouse Participant's Years
of Benefit Service determined as of his or her Early
Retirement Date by Thirty Dollars ($30.00).
The amount determined in accordance with this subsection
(ii) shall be reduced by 0.5952 of 1% for each month by which
the commencement of such Warehouse Participant's Early
Retirement Benefit precedes the first day of the month
coinciding with or next following his or her Normal
Retirement Date.
(iii) DEFERRED RETIREMENT BENEFIT. A Warehouse
Participant who retires or is deemed to retire on a Deferred
Retirement Date shall be entitled to receive a monthly
retirement benefit ("Deferred Retirement Benefit") equal to
the amount determined by multiplying the number of such
Warehouse Participant's Years of Benefit Service determined
as of his or her Deferred Retirement Date by Thirty Dollars
($30.00).
(iv) VESTED BENEFIT. Effective January 1, 1989, a
Terminated Warehouse Participant who is credited with at
least five (5) Years of Vesting Service shall be entitled to
a monthly retirement benefit ("Vested Benefit") equal to the
amount determined by multiplying the number of such Warehouse
Participant's Years of Benefit Service determined as of his
or her Termination of Employment Date by Thirty Dollars
($30.00).
The amount determined in accordance with this subsection
(iv) shall be reduced by 0.5952 of 1% for each month by which
the commencement of such Warehouse Participant's Vested
Benefit precedes the first day of the month coinciding with
or next following his or her Normal Retirement Date.
(c) Notwithstanding the preceding to the contrary, the
benefits payable to or in respect of a Warehouse Participant who
retires or separates from service shall not be less than his or
her Accrued Benefit determined in accordance with the terms of the
Plan as in effect on April 10, 1982, based upon his or her Years
of Benefit Service and Average Annual Compensation as of such
date.
<PAGE>
8. The last sentence of Sections 5.02, 6.02, 7.02, 8.03 and 9.01(b)
is hereby amended to read as follows:
"Such death benefit shall be paid in a lump sum unless the
Beneficiary requests payment in the form of an annuity."
9. Section 12.03 is hereby amended to read as follows:
"12.03 SMALL INSTALLMENTS AND CASH OUTS.
(a) In the event that any payment under the Plan would be
Fifty Dollars ($50.00) or less if paid monthly and the present
value of all such payments as of the date distribution is to
commence would exceed Three Thousand Five Hundred Dollars
($3,500.00), the Retirement Committee shall, with the written
consent of the Participant and, if married, his or her spouse,
direct the Trustee to pay such benefit in a lump sum.
(b) Notwithstanding any provision of the Plan to the
contrary, if the present value of the entire nonforfeitable
benefit payable with respect to a Participant does not exceed
Three Thousand Five Hundred Dollars ($3,500.00) as of the date
distribution of such benefit is to commence, the Retirement
Committee shall direct the Trustee to pay such benefit in a lump
sum as soon as practicable following the Participant's retirement
date, Termination of Employment Date or death, as the case may be.
The present value of such benefit shall be calculated using an
interest rate that does not exceed the lesser of (i) the rate set
forth in Section 26.11, or (ii) the applicable PBGC rate in effect
as of the first day of the Plan Year in which the distribution
occurs. The term "applicable PBGC rate" means the appropriate
deferred or immediate interest rate which would be used by the
Pension Benefit Guaranty Corporation for purposes of determining
the present value of a lump sum distribution on plan termination.
In no event shall a lump sum payment be made after the Annuity
Starting Date without the written consent of the Participant (if
living) and the Participant's spouse (if married) within the
ninety-day period ending on the distribution date.
(c) If the present value of the entire nonforfeitable
benefit payable with respect to a Participant exceeds $3,500, but
does not exceed $10,000, such Participant may, at any time prior
to the Annuity Starting Date, elect to receive payment in the form
of an immediate lump sum (in lieu of the form prescribed in
Sections 5.02, 6.02, 7.02, 8.03 or 10.05); provided, if the
Participant is married, his or her spouse must consent in writing
to such election within the ninety (90) day period ending on the
date of distribution. The present value of such benefit shall be
calculated in the manner set forth in subsection (b) of this
Section. Notwithstanding any provision of the Plan to the
contrary, a Participant who is entitled to elect an immediate lump
<PAGE>
sum payment may elect within such ninety (90) day period, payment
in the normal form prescribed in Articles V, VI, VII or VIII, as
the case may be, commencing on the date such lump sum payment
would be made.
(d) Any election pursuant to this Section shall be in
writing and shall be effective upon receipt by the Retirement
Committee. A spouse's consent under this Section must meet the
applicable requirements of Section 10.06.
10. Section 18.04 is hereby amended to read as follows:
"18.04 TRUST. In order to establish a funding medium to carry out
the provisions of the Plan, the Employers shall maintain a Trust with a
bank or trust company as Trustee, as the Finance Committee shall
appoint. Such Trust shall become a part of the Plan and shall provide
that no part of the corpus or income of the Trust Fund shall, except as
otherwise provided in this Plan, be used for, or diverted to, purposes
other than the exclusive benefit of the Participants and their
Beneficiaries.
11. Section 19.02 is hereby amended to read as follows:
"19.02 APPOINTMENT, RESIGNATION AND REMOVAL. Any person appointed
to serve as a member of the Retirement Committee shall serve at the
pleasure of the Board of Directors and may be removed by delivery of
written notice of removal which shall take effect at the date specified
therein. Any member of the Retirement Committee may resign at any time
be delivering to the Board of Directors a written notice of resignation
which shall take effect at a date specified therein. The Board of
Directors, as soon as practicable following delivery of a written
notice of removal or receipt of a written notice of resignation of any
member of the Retirement Committee, shall consider the appointment of a
successor.
12. Section 19.03 is hereby amended to read as follows:
"19.03 DUTIES. The Retirement Committee shall be a named
fiduciary within the meaning of Section 402(a)(2) of ERISA with the
following powers and complete discretionary authority to control and
manage the operation and administration of the Plan:
(a) to determine all questions concerning the eligibility of
Employees to participate in and receive benefits under the Plan;
(b) to compute the amount of benefits payable to any
Participant or other person;
(c) to authorize and direct the Trustee with respect to
payment of benefits;
<PAGE>
(d) to interpret the provisions of the Plan and to make
rules and regulations for the administration of the Plan;
(e) to maintain all the necessary records for the
administration of the Plan;
(f) to monitor the performance of the Trustee and any
Investment Managers and to report its findings to the Finance
Committee not less often than semiannually;
(g) to act as agent for service of legal process; and
(h) to employ or retain counsel, accountants, actuaries or
such other consultants as may be required to assist in
administering the Plan.
The interpretation of the Plan and the construction of Plan
provisions that are made by the Retirement Committee shall be final,
conclusive and binding on all affected parties.
Except as provided in subsection (f) of this Section, the
Retirement Committee shall have no power or authority over the
investment of the assets of the Trust Fund. The Finance Committee,
Trustee and/or any duly appointed investment manager or managers shall
have exclusive authority and discretion to manage and control the Trust
Fund in accordance with the terms of the Trust.
13. Article XX is hereby amended to read as follows:
ARTICLE XX
Finance Committee
"20.01 DUTIES. The Finance Committee shall be a named fiduciary
within the meaning of Section 402(a)(2) of ERISA and shall have the
following duties and responsibilities:
(a) to appoint and remove the Trustee and establish the
terms of the Trust agreement;
(b) to establish investment policies and objectives with
regard to management of the Trust fund; and
(c) to appoint one or more Investment Managers to direct the
investment of the Trust Fund or such portion thereof as may be
designated by the Finance Committee, to remove any Investment
Manager, and to establish investment guidelines which shall be
binding on such Investment Managers.
The Finance Committee shall act by a majority of its members and
such action may be taken by a vote at a meeting or in writing without a
<PAGE>
meeting. Any member may participate in a meeting by means of a
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other. In
carrying out its duties, the Finance Committee may employ or retain
counsel, accountants, actuaries and such other consultants as it deems
to be in the best interests of the Plan. The Finance Committee may, by
a writing signed by a majority of its members, delegate to any member
or members of the Committee or to any Employee or Employees, severally
or jointly, the authority to perform any ministerial act in connection
with the administration of the Plan.
The Finance Committee shall have no power or authority to control
the operation and administration of the Plan, apart from its duties as
enumerated in this Section.
20.02 FIDUCIARY DUTIES. The Finance Committee shall discharge its
duties under the Plan and Trust solely in the interest of the
Participants and their Beneficiaries and:
(a) for the exclusive purposes of (i) providing benefits to
the Participants and Beneficiaries; and (ii) defraying reasonable
expenses of administering the Plan and Trust;
(b) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct
of an enterprise of like character and with like aims; and
(c) by diversifying the investments of the Trust so as to
minimize the risk of large losses, unless under the circumstances
it is clearly prudent not to do so.
20.02 COMPENSATION AND REIMBURSEMENT OF EXPENSES. The members of
the Finance Committee shall be entitled to reasonable compensation for
services rendered, and to reimbursement of expenses properly and
actually incurred, in the performance of their duties on behalf of the
Plan, but no person so serving who already receives pay from an
Affiliated Employer shall receive compensation for such services,
except for reimbursement of expenses properly and actually incurred and
not otherwise reimbursed.
20.04 RELIANCE ON REPORTS. The Finance Committee shall be
entitled to rely upon all certificates and reports made by any counsel,
accountant, actuary, investment manager or other consultant employed or
retained to assist in administering the Plan and Trust.
20.05 MULTIPLE SIGNATURES. A majority of the members of the
Finance Committee or any one member authorized by such Committee shall
have authority to execute all documents, reports or other memoranda
necessary or appropriate to carry out the actions and decisions of the
Finance Committee. The Trustee, any investment manager or any other
<PAGE>
interested party may rely upon any document, report or other memorandum
so executed as evidence of the Finance Committee action or decision
indicated thereby.
14. Section 26.13 is hereby amended to read as follows:
"26.13 DELEGATION OF AUTHORITY BY SUBSIDIARIES. Each subsidiary
of Hannaford Bros. Co. that adopts the Plan hereby irrevocably grants
to Hannaford Bros. Co., the Board of Directors, the Retirement
Committee and the Finance Committee exclusive authority to exercise all
of the powers conferred on them by the terms of the Plan, including the
power vested in the Board of Directors to amend or terminate the Plan.
Each such subsidiary shall automatically become a party to the Trust
without further action on its part."
15. Section 26.16 is hereby amended to read as follows:
"26.16 DIRECTED PAYMENTS. Effective January 1, 1994, a former
Participant, surviving spouse or Beneficiary who is entitled to receive
monthly benefit payments from the Plan and who is a participant in the
Hannaford Bros. Co. Retiree Medical Plan ("Retiree Medical Plan") may
direct the Trustee to deduct such portion of each monthly benefit
payment as is necessary to satisfy his or her required monthly
contribution under the Retiree Medical Plan and to remit such amount to
the Hannaford Bros. Co. Tax Exempt Employee Benefits Trust ("Tax Exempt
Trust"), provided the amount of each monthly benefit payment from the
Plan is at least equal to the amount of his or her required monthly
contribution under the Retiree Medical Plan. Such direction shall be
made on such form and in such manner as the Retirement Committee may
prescribe and shall be effective as of the first monthly benefit
payment following receipt by the Retirement Committee, provided it is
received at least fifteen (15) days in advance of such payment.
Notwithstanding the foregoing to the contrary, any individual who
is a former highly compensated employee (within the meaning of Section
414(q) of the Code) or who is a "party in interest" (as defined in
Section 3(14) of ERISA) shall not be permitted to direct payments
pursuant to this Section.
A direction pursuant to this Section may be revoked, in writing,
by the former Participant, surviving spouse or Beneficiary, as the case
may be, at any time, and shall be effective as soon as practicable
following receipt by the Retirement Committee.
The Retirement Committee may terminate the availability of this
direct payment provision upon thirty (30) days' prior written notice to
the Trustee and each affected former Participant, surviving spouse and
Beneficiary.
<PAGE>
The Retirement Committee shall maintain records sufficient to
demonstrate that no payments have been made to the Tax Exempt Trust
pursuant to this Section before the monthly benefit payment would have
been otherwise made to the former Participant, surviving spouse or
Beneficiary, as the case may be, and that no expense has been incurred
by the Plan as a result of this Section."
16. This Amendment shall be effective, generally, January 1, 1994;
provided, however, that Part 9 shall be effective January 1, 1995, and Parts
3 through 6 and 10 through 14 shall be effective May 19, 1994.
Exhibit 10.5
FIRST AMENDMENT
TO THE
HANNAFORD BROS. CO. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Hannaford Bros. Co. Supplemental Executive Retirement Plan ("Plan")
was last amended and restated effective January 1, 1993. The Plan is hereby
amended in the following respects:
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context clearly indicates otherwise.
2. Section 3.1 is hereby amended by adding at the end thereof the
following paragraph:
"In addition to the annual benefit described in this section,
Roger W. Hoyt shall be entitled to:
(a) (i) a lump sum payment equal to the supplemental pension
benefit described in Part 2, and (ii) a lump sum payment equal to
the present value of the retiree medical coverage described in
Part 3, of a certain letter agreement dated June 1, 1994, setting
forth benefits the Company shall provided to Mr. Hoyt in lieu of
benefits he would have received under the Company's Early
Retirement Incentive Program, if he had retired in 1992; and
(b) a lump sum payment in satisfaction of the Company's
obligation to contribute to Mr. Hoyt's housing costs, as described
in Part 3 of said Agreement."
3. This Amendment shall be effective June 1, 1994.
Exhibit 10.6
HANNAFORD BROS. CO. EMPLOYEE STOCK PURCHASE PLAN
The Hannaford Bros. Co. Employee Stock Purchase Plan (formerly the
Hannaford Bros. Co. 1982 Employee Stock Purchase Plan), originally adopted by
the Executive Committee of the Board of Directors of the Corporation on March
23, 1982, and approved by the stockholders of the Corporation on May 28, 1982,
and amended from time to time thereafter, is hereby amended and restated
effective October 19, 1994.
1. PURPOSE. The purpose of this Plan is to encourage eligible
employees to become stockholders in the Corporation and to afford them an
opportunity to share in the profits and growth of the Corporation.
2. DEFINITIONS. As used in this Plan, the following words and
phrases wherever capitalized shall have the following meanings, respectively,
unless the context clearly indicates that a different meaning is intended:
(a) "Acceptance Date" shall mean the date fixed by the Committee
by which Employees may accept Options.
(b) "Board" shall mean the Board of Directors of the
Corporation.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Common Stock" shall mean common stock, par value $.75 per
share, of the Corporation.
(e) "Committee" shall mean the committee appointed pursuant to
Section 3 which shall have the authority to control and manage the
administration of the Plan.
(f) "Compensation" shall mean the base salary or wages paid to
an Employee by the Corporation or any Subsidiary, determined prior to
any amounts being withheld under the Hannaford Bros. Co. Savings and
Investment Plan or the Hannaford Bros. Co. Flexible Benefits Plan,
excluding unguaranteed overtime pay, bonuses and other irregular
payments.
(g) "Corporation" shall mean Hannaford Bros. Co.
(h) "Employee" shall mean an individual employed by the
Corporation, a Parent, or any Subsidiary.
(i) "Employee Stock Purchase Plan" shall mean a plan described
in Sec. 423 of the Code.
(j) "Exercise Date" shall mean the date fixed by the Committee
on which Options may be exercised.
(k) "Offering Date" shall mean the date fixed by the Committee
on which Options are offered.
(l) "Option" shall mean a stock option granted under the Plan.
(m) "Option Agreement" shall mean a written instrument which
specifies the terms and restrictions of an Option.
<PAGE>
(n) "Option Period" shall mean the period commencing on the
Withholding Date and ending on the Exercise Date with respect to any
Option.
(o) "Parent" shall mean a parent corporation within the meaning
of Sec. 424(e) and (g) of the Code.
(p) "Plan" shall mean the Hannaford Bros. Co. Employee Stock
Purchase Plan.
(q) "Share" shall mean a share of Common Stock of the
Corporation, as adjusted in accordance with Section 12.
(r) "Subsidiary" shall mean a subsidiary corporation within the
meaning of Sec. 424(f) and (g) of the Code.
(s) "Withholding Date" shall mean the date fixed by the
Committee as of which withholding of an Employee's Compensation shall
commence under the Plan.
3. ADMINISTRATION.
(a) COMMITTEE MEMBERS. The Plan shall be administered by the
members of the Human Resources Committee of the Board who are not
Employees. A majority of the members of the Committee shall constitute
a quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the
Committee. Any member may participate in a meeting of the Committee by
means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each
other. Further, any action of the Committee may be taken without a
meeting if all of the members of the Committee sign written consents
setting forth the action taken or to be taken, at any time before or
after the intended effective date of such action.
(b) POWERS. The Committee shall have the power and authority to
administer the Plan, including the following powers and authority which
shall be exercised in accordance with the terms of the Plan:
(i) to fix the Offering Date, Acceptance Date, Withholding
Date and Exercise Date with respect to each offering of Options
under the Plan;
(ii) to fix the aggregate number of Shares which may be
issued under Options offered as of each Offering Date, provided
the maximum number of Shares which may be issued under Options
granted under the Plan shall not exceed the limitation set forth
in Section 4;
(iii) to determine, from among the Corporation and its
Subsidiaries, which corporation's (or corporations') Employees
shall be offered Options on each Offering Date;
(iv) to determine the maximum percentage of Compensation
that an Employee may have withheld during an Option Period;
(v) to determine which Employees have satisfied the
eligibility requirements set forth in Section 5;
<PAGE>
(vi) to determine the terms and restrictions of each
offering of Options;
(vii) to make adjustments in accordance with Section 12;
(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan;
(ix) to interpret the Plan and make all other
determinations deemed necessary or advisable for the
administration of the Plan.
(c) DELEGATION OF MINISTERIAL DUTIES. The Committee may
delegate to any other person or persons, severally or jointly, the
authority to perform any ministerial act in connection with the
administration of the Plan.
(d) SIGNATURES. The Committee may authorize any member thereof
to execute all instruments required in the administration of the Plan
and such instruments may be executed by facsimile signature.
4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
12, the maximum aggregate number of Shares which may be issued under Options
granted under the Plan shall, effective February 2, 1989, be equal to the sum
of the following:
(a) the sixty thousand (60,000) Shares authorized when the Plan
was first approved by stockholders, as such number was thereafter
adjusted in accordance with Section 12; and
(b) four hundred thousand (400,000) Shares.
In the event that any Option granted under the Plan expires or terminates for
any reason without having been exercised in full, the Shares subject to, but
not issued under, such Option shall become available for other Options, unless
the Plan shall have been terminated.
5. ELIGIBILITY.
(a) REQUIREMENT. Each Employee of a corporation, the Employees
of which are offered Options, shall be eligible to participate in such
offering if such Employee has been employed by the Corporation or any
Subsidiary for a period of six (6) months prior to the Offering Date.
Options shall be granted only to Employees.
(b) LIMITATION ON STOCK OWNERSHIP. An Employee shall not be
granted an Option if such Employee, immediately after the Option is
granted, owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the
Corporation, a Parent or any Subsidiary. For purposes of applying the
percentage limitation of the preceding sentence, the rules of Sec.
424(d) of the Code shall apply in determining the stock ownership of an
individual, and stock which such Employee may purchase under outstanding
options shall be treated as stock owned by such Employee.
(c) LIMIT ON GRANTS. An Employee shall not be granted an Option
which permits his or her rights to purchase stock under all Employee
Stock Purchase Plans of the Corporation, its Parent and Subsidiaries, to
<PAGE>
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000.00)
of fair market value of such stock (determined at the time such Option
is granted) for each calendar year in which such Option is outstanding
at any time. For purposes of this paragraph:
(i) The right to purchase stock under an option accrues
when the Option (or any portion thereof) first becomes exercisable
during the calendar year;
(ii) The right to purchase stock under an Option accrues at
the rate provided in the Option, but in no case may such rate
exceed Twenty-Five Thousand Dollars ($25,000.00) of fair market
value of such stock (determined at the time such Option is
granted) for any one calendar year;
(iii) A right to purchase stock which has accrued under one
Option granted pursuant to the Plan may not be carried over to any
other Option.
6. GRANTING OF OPTIONS.
(a) EMPLOYEE RIGHTS. All Employees granted Options shall have
the same rights and privileges, except that the amount of stock which
may be purchased by Employees under the Options may bear a uniform
relationship to Compensation.
(b) OFFERING DATE. The Committee shall fix an initial Offering
Date within six (6) months following the date the Plan is approved by
the stockholders of the Corporation. From time to time thereafter, but
not more frequently than once during any fiscal year of the Corporation,
the Committee may fix additional Offering Dates.
(c) OFFERS. On each Offering Date, the Committee shall offer
Options by furnishing each eligible Employee with an Option Agreement
and such other documents as it shall deem advisable. Each Option
Agreement shall include the following:
(i) the maximum percentage of the Employee's Compensation
which may be withheld during the Option Period to be used to
purchase Shares upon the exercise of an Option;
(ii) the option price;
(iii) the Acceptance Date;
(iv) the Withholding Date;
(v) the Exercise Date;
(vi) the time and the manner in which an Option may be
exercised;
(vii) such other terms and restrictions, consistent with
the terms of the Plan, as may be determined by the Committee.
(d) OPTION PRICE. The option price for Shares to be issued
under any Option shall be fixed by the Committee, provided the option
price shall not be less than the lesser of (i) eighty-five percent (85%)
<PAGE>
of the fair market value of the Shares at the time the Options are
granted; or (ii) the fair market value of the Shares on the Exercise
Date. The fair market value of the Shares to be issued under any Option
shall be determined in accordance with the requirements of Sec.
423(b)(6) of the Code and the regulations issued thereunder.
(e) ACCEPTANCE. Each Employee may accept an offer only in such
manner as the Committee shall prescribe in the Option Agreement. Any
offer not accepted by the Acceptance Date shall expire thereon.
Each Employee who accepts an offer, as a condition thereof, shall
designate the percentage of his or her Compensation to be withheld each
payroll period during the Option Period, provided that the percentage
designated shall not exceed the maximum percentage prescribed in the
Option Agreement. Amounts withheld from Employees shall be retained as
general assets of the Corporation to be applied by it in accordance with
the Plan. The Corporation shall maintain records of the amounts
withheld and shall credit such amounts with interest, if any, at such
rate as shall be prescribed in the Option Agreement.
An Employee may not increase or decrease the percentage of
Compensation designated to be withheld, but may terminate withholding at
such time and in such manner as prescribed in the Option Agreement. An
Employee who terminates withholding may, subject to the provisions of
Section 8 through 11, elect to have the Corporation either (i) retain
the amounts plus interest, if any, previously withheld, or (ii) return
such amounts plus interest, if any, to the Employee. Such election
shall be made when the Employee terminates withholding. If an Employee
has the Corporation retain the amounts previously withheld, such
Employee's Option shall continue, but may be exercised only to the
extent of such amounts, plus any interest credited thereon.
Alternatively, if an Employee elects to withdraw such amounts, such
Employee's Option shall expire as of the date of such election.
(f) NON-TRANSFERABILITY OF OPTIONS. Options may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the Employee, only by such
Employee.
7. EXERCISE OF OPTIONS. Each Employee may exercise an Option at such
time and in such manner as the Committee shall prescribe in the Option
Agreement, provided an Option cannot be exercised after the expiration of
twenty-seven (27) months from the date such Option is granted. Any Option not
exercised by the Exercise Date shall expire thereon.
As of the Exercise Date, the Committee shall apply the amounts withheld
from each Employee who exercises an Option, plus any interest credited
thereon, toward the purchase of (i) the maximum number of Shares (including
fractional Shares) determined by dividing such amounts, plus any interest, by
the option price per Share; or (ii) such lesser number of whole Shares
specified by the Employee at the time of exercise. Only amounts withheld
during the Option Period, plus any interest thereon, may be used to purchase
Shares. The amounts withheld, plus any interest, not used to purchase Shares
shall be paid to the Employee in a lump sum in accordance with the Option
Agreement.
<PAGE>
If as of any Exercise Date Employees exercise Options for Shares the
aggregate number of which exceeds the aggregate number of Shares remaining
which may be issued under Options in accordance with the limitation contained
in Section 4, then each Employee shall receive that number of Shares
determined by multiplying the number of Shares for which such Employee
exercised an Option by a fraction, the numerator of which is the aggregate
number of Shares remaining which may be issued in accordance with Section 4
and the denominator of which is the aggregate number of Shares for which all
Employees exercised Options as of such Exercise Date.
Until the date of issuance of the Shares, as recorded on the books of
the Corporation, no right to vote or receive dividends or any other rights as
a stockholder shall exist with respect to Options, notwithstanding the
exercise thereof. No adjustment will be made for a dividend or other
stockholder rights for which the record date is prior to the date Shares are
issued except as provided in Section 12. In the event certificates are to be
issued evidencing Shares purchased by the exercise of Options, they shall be
issued by the Corporation and delivered in the normal course without undue
delay.
8. TERMINATION OF EMPLOYMENT. In the event an Employee ceases to be
employed by the Corporation or any Subsidiary, and is no longer employed by
any of them, for any reason other than retirement, disability or death, any
Option granted to such Employee shall expire on the date of termination. If
an Option expires under this Section, the amounts withheld, plus any interest,
shall be paid to the Employee in a lump sum as prescribed in the Option
Agreement and the Employee shall have no further rights under this Plan.
9. RETIREMENT. In the event an Employee retires from the Corporation
or any Subsidiary, and is no longer employed by any of them, and by reason
thereof such Employee is entitled to receive an early, normal or deferred
retirement benefit under the Hannaford Bros. Co. Employees' Retirement Plan,
such Employee may exercise an Option at any time within the three (3) month
period following retirement, but not later than the Exercise Date, provided
such exercise shall be limited to the maximum number of Shares (including
fractional Shares) determined by dividing the amounts withheld prior to
retirement, plus any interest, by the option price per Share. Alternatively,
such exercise may be for a lesser number of whole Shares specified by such
Employee at the time of exercise. The amounts withheld, plus any interest,
not used to purchase Shares shall be paid to the retired Employee in a lump
sum in accordance with the Option Agreement.
10. DISABILITY. In the event an Employee who is disabled ceases to be
employed by the Corporation or any Subsidiary and is no longer employed by any
of them, such Employee may exercise an Option at any time within the three (3)
month period following termination of employment, but not later than the
Exercise Date, provided such exercise shall be limited to the maximum number
of Shares (including fractional Shares) determined by dividing the amounts
withheld prior to termination, plus any interest, by the option price per
Share. Alternatively, such exercise may be for a lesser number of whole
Shares specified by such Employee at the time of exercise. The amounts
withheld, plus any interest, not used to purchase Shares shall be paid to the
disabled Employee in a lump sum in accordance with the Option Agreement.
An Employee is disabled if he or she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
<PAGE>
twelve (12) months. However, an Employee shall not be considered disabled
unless he or she furnishes proof in such form and manner, and at such times,
as the Committee may require.
11. DEATH. In the event an Employee dies while in the employ of the
Corporation or any Subsidiary, any Option granted to such Employee may be
exercised on the Exercise Date by such Employee's estate or by such other
person or persons to whom such Employee's rights hereunder pass by will or by
the laws of descent and distribution, provided such exercise shall be limited
to the maximum number of Shares (including fractional Shares) determined by
dividing the amounts withheld prior to such Employee's death, plus any
interest, by the option price per Share. Alternatively, such exercise may be
for a lesser number of whole Shares specified by the estate or other person or
persons with rights under the Plan at the time of exercise. The amounts
withheld, plus any interest, not used to purchase Shares shall be paid in a
lump sum to the Employee's estate or to such other person or persons to whom
such Employee's rights pass by will or by the laws of descent and
distribution.
12. ADJUSTMENTS.
(a) STOCK SPLIT AND DIVIDENDS. If the number of Shares
outstanding changes as a result of a stock split or stock dividend, the
number of Shares to be issued under Options and the option price per
Share shall be proportionately adjusted by the Committee so as to comply
with Sec. 423 of the Code.
(b) MERGER AND CONSOLIDATION. In the event of a merger or
consolidation in which the Corporation is the surviving corporation, or
the acquisition by the Corporation of property or stock of an acquired
corporation, or any reorganization, the number and class of Shares to be
issued under Options and the option price per Share shall be adjusted by
the Committee so as to comply with Sec. 423 and Sec. 424 of the Code.
A merger or consolidation in which the Corporation is not the
surviving corporation shall terminate all Options, except that each
Employee shall have the right to exercise outstanding Options
immediately prior to the effective date of such merger or consolidation,
provided such exercise shall be limited to the maximum number of Shares
(including fractional Shares) determined by dividing the amounts
withheld prior to such effective date, plus any interest, by the option
price per Share. In such event, an Employee may exercise an option for
a lesser number of whole Shares specified at the time of exercise.
13. AMENDMENT AND TERMINATION.
(a) AMENDMENT. The Board, without further approval of the
stockholders of the Corporation, may amend the Plan from time to time in
such respects as the Board may deem advisable, provided that no
amendment shall become effective prior to approval of the stockholders
of the Corporation which:
(i) increases the maximum number of Shares for which
Options may be granted; or
(ii) changes the provisions relating to Employees eligible
to receive Options under the Plan.
<PAGE>
(b) TERMINATION. The Board, without further approval of the
stockholders of the Corporation, may at any time terminate the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if the Plan had
not been amended or terminated.
14. EFFECTIVE DATE. The Plan, as amended and restated herein, shall
be effective October 19, 1994. The Plan was originally effective on May 28,
1982.
15. MISCELLANEOUS.
(a) EMPLOYMENT. The granting of an Option to an Employee shall
not give the Employee any right to be retained in the employ of the
Corporation or any Subsidiary.
(b) TAX WITHHOLDING. The Corporation shall be authorized to
take such action as may be necessary in the opinion of the Corporation
to satisfy its legal obligations for the withholding and payment of
taxes arising out of the operation of the Plan.
(c) HEADINGS. The paragraph headings are included solely for
convenience and shall in no event affect, or be used in connection with,
the interpretation of the Plan.
Exhibit 10.12
SECOND AMENDMENT TO EMPLOYMENT CONTINUITY AGREEMENT
THIS AMENDMENT made this 13th day of March, 1995, between HANNAFORD
BROS. CO., a Maine corporation (the "Company") and JAMES L. MOODY, JR., of
South Portland, Maine ("Officer").
WHEREAS, the Company and Officer have entered into an Employment
Continuity Agreement ("Agreement") dated March 16, 1991, and thereafter
amended on April 25, 1992; and
WHEREAS, the parties desire to amend Section 3(d) of the Agreement to
provide for accelerated payment of benefits under the Hannaford Bros. Co.
1993 Long Term Incentive Plan in the event of a change in control; and
WHEREAS, Section 11 of the Agreement provides that the Agreement may
be amended in writing by the parties;
NOW, THEREFORE, in consideration of the mutual promises and other
consideration recited in the Agreement, IT IS AGREED:
1. The terms of this Amendment shall have the meanings set forth in
the Agreement.
2. Subsection (d) of Section 3 of the Agreement is hereby amended to
read as follows:
"(d) The Officer shall be entitled to such benefits and rights
as are provided upon the occurrence of a Change in Control Event under
the terms of the Company's 1988 Stock Plan, 1993 Long Term Incentive
Plan, 1980 Long Term Incentive Plan and Supplemental Executive
Retirement Plan (`SERP'). For purposes of calculating any benefit
payable with respect to the Officer under the SERP, the number of the
Officer's years of service shall be increased by three (3)."
WITNESS HANNAFORD BROS. CO.
s/Cheryl Welch By s/Andrew P. Geoghegan
Its Vice President
s/Laurene M. Odden s/James L. Moody, Jr.
James L. Moody, Jr.
Exhibit 10.14
SECOND AMENDMENT TO EMPLOYMENT CONTINUITY AGREEMENT
THIS AMENDMENT made this 13th day of March, 1995, between HANNAFORD
BROS. CO., a Maine corporation (the "Company") and HUGH G. FARRINGTON, of
Cape Elizabeth, Maine ("Officer").
WHEREAS, the Company and Officer have entered into an Employment
Continuity Agreement ("Agreement") dated March 15, 1991, and thereafter
amended on April 28, 1992; and
WHEREAS, the parties desire to amend Section 3(d) of the Agreement to
provide for accelerated payment of benefits under the Hannaford Bros. Co.
1993 Long Term Incentive Plan in the event of a change in control; and
WHEREAS, Section 11 of the Agreement provides that the Agreement may
be amended in writing by the parties;
NOW, THEREFORE, in consideration of the mutual promises and other
consideration recited in the Agreement, IT IS AGREED:
1. The terms of this Amendment shall have the meanings set forth in
the Agreement.
2. Subsection (d) of Section 3 of the Agreement is hereby amended to
read as follows:
"(d) The Officer shall be entitled to such benefits and rights
as are provided upon the occurrence of a Change in Control Event under
the terms of the Company's 1988 Stock Plan, 1993 Long Term Incentive
Plan, 1980 Long Term Incentive Plan and Supplemental Executive
Retirement Plan (`SERP'). For purposes of calculating any benefit
payable with respect to the Officer under the SERP, the number of the
Officer's years of service shall be increased by three (3)."
WITNESS HANNAFORD BROS. CO.
s/Cheryl Welch By s/Andrew P. Geoghegan
Its Vice President
s/Laurene M. Odden s/Hugh G. Farrington
Hugh G. Farrington
Exhibit 10.16
SECOND AMENDMENT TO EMPLOYMENT CONTINUITY AGREEMENT
THIS AMENDMENT made this _______ day of _____________, 1995, between
HANNAFORD BROS. CO., a Maine corporation (the "Company") and ______________,
of ____________ ("Officer").
WHEREAS, the Company and Officer have entered into an Employment
Continuity Agreement ("Agreement") dated _____________ and thereafter
amended on ________________; and
WHEREAS, the parties desire to amend Section 3(d) of the Agreement to
provide for accelerated payment of benefits under the Hannaford Bros. Co.
1993 Long Term Incentive Plan in the event of a change in control; and
WHEREAS, Section 11 of the Agreement provides that the Agreement may
be amended in writing by the parties;
NOW, THEREFORE, in consideration of the mutual promises and other
consideration recited in the Agreement, IT IS AGREED:
1. The terms of this Amendment shall have the meanings set forth in
the Agreement.
2. Subsection (d) of Section 3 of the Agreement is hereby amended to
read as follows:
"(d) The Officer shall be entitled to such benefits and rights
as are provided upon the occurrence of a Change in Control Event under
the terms of the Company's 1988 Stock Plan, 1993 Long Term Incentive
Plan, 1980 Long Term Incentive Plan and Supplemental Executive
Retirement Plan (`SERP'). For purposes of calculating any benefit
payable with respect to the Officer under the SERP, the number of the
Officer's years of service shall be increased by two (2)."
WITNESS HANNAFORD BROS. CO.
By
Its
Name:
Exhibit 10.19
FIRST AMENDMENT
TO THE
HANNAFORD BROS. CO. SAVINGS AND INVESTMENT PLAN
The Hannaford Bros. Co. Savings and Investment Plan (the "Plan") was
last amended and restated effective generally January 1, 1993. The Plan is
hereby further amended in the following respects:
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Section 2.11 of the Plan is hereby amended to read as follows:
"Compensation" shall mean the basic compensation paid, before any
reduction pursuant to a Deferral Election or a benefit election under
the Hannaford Bros. Co. Flexible Benefits Plan, by an Employer to an
Employee for services rendered while a Participant, excluding
reimbursements or other expense allowances, fringe benefits (cash and
noncash), moving expenses, deferred compensation and welfare benefits,
unguaranteed overtime pay, bonuses, and other irregular payments.
Notwithstanding the foregoing to the contrary, effective January
1, 1989, the annual Compensation of any Employee in excess of Two
Hundred Thousand Dollars ($200,000.00) (or such higher amount as the
Secretary of the Treasury may prescribe) shall not be taken into
account under the Plan, and, effective January 1, 1994, the annual
Compensation of any Employee in excess of One Hundred Fifty Thousand
Dollars ($150,000.00) (or such higher amount as the Secretary of the
Treasury may prescribe) shall not be taken into account under the Plan.
In the event Compensation is determined based on a period which
contains fewer than twelve (12) calendar months, the annual
Compensation limit shall be an amount equal to the annual Compensation
limit for the calendar year in which the period begins multiplied by a
fraction, the numerator of which is the number of full calendar months
in the period and the denominator of which is twelve (12). For
purposes of the annual Compensation limit, any Compensation paid to an
Employee who is the spouse or a lineal descendant (who has not attained
age nineteen (19) by the close of the Plan Year) of an Employee who is
a Five Percent Owner or one of the ten (10) Highly Compensated
Employees paid the highest compensation (as defined in Section 7.05)
for the Plan Year shall be treated as paid to or on behalf of such Five
Percent Owner or Highly Compensated Employee. If the annual
Compensation limit is exceeded as a result of the application of the
preceding sentence, then the limit shall be prorated among the affected
Employees' Compensation as determined prior to the application of the
annual Compensation limit. If Compensation for a prior Plan Year is
taken into account for any Plan Year, such Compensation shall be
subject to the annual Compensation limit in effect for such prior Plan
Year.
<PAGE>
The average percentage of total compensation (as defined in
Regulation Section 1.414(s)-1(d)(3)(ii) included in the Compensation of
Highly Compensated Employees as a group shall not exceed by more than a
DE MINIMIS amount the average percentage of total compensation included
in the Compensation of Non-Highly Compensated Employees as a group.
This determination shall be made in accordance with the provisions of
Regulation Section 1.414(s)-1(d)(3), which is incorporated herein by
reference."
3. Article II is hereby amended by redesignating Sections 2.27
through 2.58 as Sections 2.28 through 2.59 and by adding a new Section 2.27
to read as follows:
"2.27 'Finance Committee' shall mean the Finance Committee of the
Board of Directors."
4. Article II is hereby amended by deleting Section 2.32 in its
entirety and by redesignating Sections 2.33 through 2.58 (redesignated
herein as Sections 2.34 through 2.59) as Section s.233 through 2.58.
5. Section 2.34 is hereby amended to read as follows:
"2.34 'Investment Manager' shall mean any fiduciary, other than
the Trustee or a named fiduciary (as defined in Section 402(a)(2) of
ERISA):
(a) who is appointed by the Finance Committee to manage,
acquire, or dispose of all or any portion of the Trust Fund;
(b) who is (i) registered as an investment adviser under the
Investment Advisers Act of 1940; (ii) is a bank, as defined in
said Act; or (iii) is an insurance company qualified to manage,
acquire or dispose of all or any portion of the Trust Fund under
the laws of more than one State; and
(c) who has acknowledged, in writing, that he or she is a
fiduciary with respect to the Plan."
6. Section 2.40 is hereby amended to read as follows:
"2.40 'Named Fiduciary' shall mean, with respect to the operation
and administration of the Plan, the Administrative Committee, and with
respect to the management of the Trust Fund, the Finance Committee and
the Trustee."
7. Section 2.55 is hereby amended to read as follows:
"Trustee shall mean the person or persons appointed by the Finance
Committee to serve as trustee(s) of the Trust."
8. Section 4.03 is hereby amended to read as follows:
<PAGE>
"4.03 'Form of Contribution'. Elective contributions shall be
made in cash. Matching Contributions may, at the election of the Human
Resources Committee of the Board of Directors, be made in cash or in
Company Stock, or any combination thereof; provided any contribution in
the form of Company Stock shall be valued at its fair market value as
of the date of contribution."
9. Section 7.05 is hereby amended by adding the following new
paragraph at the end thereof:
"For Limitation Years beginning after December 31, 1991, for
purposes of applying the limitations of this Article 'compensation' for
a Limitation Year shall mean the compensation actually paid or
includable in gross income during such Limitation Year.
Notwithstanding the preceding sentence, 'compensation' with respect to
a Participant who is permanently and totally disabled (within the
meaning of Section 22(e)(3) of the Code) shall mean the compensation
such Participant would have received for the Limitation Year is he or
she had been paid at the rate of compensation paid immediately before
becoming permanently and totally disabled; provided, such imputed
compensation may be taken into account only if the Participant is not a
Highly Compensated Employee and contributions made on behalf of such
Participant are nonforfeitable when made."
10. Section 8.03 is hereby amended to read as follows:
"8.03 ALLOCATION OF EMPLOYER CONTRIBUTIONS. Employer
Contributions made on behalf of each Participant for payroll period
ending in any month shall be allocated to the Participant's Account as
of the Valuation Date coinciding with or next following the end of such
month; provided that any Matching Contributions shall be allocated
based on such Participant's Elective Contributions (excluding Excess
Elective Contributions) as the Human Resources Committee of the Board
of Directors may determine."
11. Section 9.10 is hereby amended by adding the following new
subsection (d) and existing subsection (d) is hereby redesignated as
subsection (e):
"(d) Notwithstanding subsection (b) to the contrary, if an
individual after receiving the written explanation required by
subsection (b), affirmatively elects to make or not make a direct
rollover, an eligible rollover distribution may be made less than
thirty (30) days after the date such written explanation was given,
provided the Administrative Committee has informed such individual, in
writing, of his or her right to a period of at least thirty (30) days
to make such election."
12. Section 11.02 is hereby amended to read as follows:
"11.02 Investment Funds. The Trustee shall establish a Company
Stock Fund and one or more other Investments Funds as the Finance
<PAGE>
Committee may from time to time direct. The Finance Committee shall
direct that each Investment Fund, other than the Company Stock Fund,
shall be invested:
(a) at the discretion of the Trustee in accordance with such
investment guidelines and objectives as may be established by the
Finance Committee for such Investment Fund; or
(b) at the discretion of a duly appointed Investment Manager
in accordance with such investment guidelines and objectives as
may be established by the Finance Committee; or
(c) in such investments as the Finance Committee may specify
for such Investment Fund.
The Finance Committee may from time to time change its direction
with respect to any Investment Fund and may, at any time, eliminate any
Investment Fund. Whenever an Investment Fund is eliminated, the
Trustee shall promptly liquidate the assets of such Investment Fund and
reinvest the proceeds thereof in accordance with the direction of the
Finance Committee.
The Trustee shall transfer to each Investment Fund such portion of
the assets of the Trust as the Administrative Committee may from time
to time direct in accordance with the terms of the Plan. All interest,
dividends and other income received with respect to, and any proceeds
realized from the sale or other disposition of, assets held in any
Investment Fund shall be credited to and reinvested in such Investment
Fund, and all expenses properly attributable to any Investment Fund
shall be paid therefrom unless paid by the Employers."
13. Section 11.03 is hereby deleted in its entirety and Sections 11.04
through 11.09 are redesignated as Sections 11.03 through 11.08.
14. Section 11.09 (redesignated herein as 11.08) is hereby amended to
read as follows:
"11.08 Voting Rights. Stock held in the Company Stock Fund shall
be voted by the Trustee."
15. Article XII is hereby amended to read as follows:
"ARTICLE XII
Finance Committee
12.01 DUTIES. The Finance Committee shall be a Named Fiduciary
within the meaning of Section 402(a)(2) of ERISA and shall have the
following powers and duties:
(a) to appoint and remove the Trustee and establish the
terms of the Trust agreement;
<PAGE>
(b) to direct the Trustee to establish one or more
Investment Funds and to change or eliminate any Investment Fund
other than the Company Stock Fund;
(c) to appoint one or more Investment Managers to direct the
investment of the assets of the Trust or such portion thereof as
may be designated by the Finance Committee; to remove any
Investment Manager; and to establish investment guidelines and
objectives which shall be binding on such Investment Managers;
(d) to limit the investment of one or more Investment Funds
to such shares of stock, bonds, mortgages, notes, mutual fund
shares, deposit administration, investment or group annuity
contracts issued by a legal reserve life insurance company or
other property of any kind, real or personal, as the Finance
Committee may deem appropriate;
(e) to establish investment guidelines and objectives which
shall be binding on the Trustee;
(f) to employ or retain counsel, accountants and other
consultants, including professional investment advisers, as it
deems to be in the best interests of the Plan;
(g) to direct the Trustee to employ and transfer all of the
assets of the Trust or such portion thereof as the Finance
Committee may designate to one or more custodians selected by it;
and
(h) to approve and accept accounts rendered by the Trustee.
The Finance Committee shall act by a majority of its members and
such action may be taken by a vote at a meeting or in writing without a
meeting. Any member may participate in a meeting by means of a
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other."
12.02 DELEGATION OF MINISTERIAL DUTIES. The Finance Committee
may, by a writing signed by a majority of its members, delegate to any
member or members of the Committee or to any Employee or Employees,
severally or jointly, the authority to perform any ministerial act in
connection with the administration of the Plan.
12.03 COMPENSATION AND REIMBURSEMENT OF EXPENSES. The members of
the Finance Committee shall be entitled to reasonable compensation for
services rendered and to reimbursement of expenses properly and
actually incurred, in the performance of their duties on behalf of the
Plan, but no person so serving who already receives compensation from
an Employer or any Related Employer for services rendered as an
employee shall receive compensation for such services, except for
reimbursement of expenses properly and actually incurred and not
otherwise reimbursed.
<PAGE>
12.04 RELIANCE ON REPORTS. The Finance Committee shall be
entitled to rely upon all certificates and reports made by any agent,
attorney, accountant, actuary or other consultant, including any
investment adviser, employed to assist in the performance of its
duties.
12.05 MULTIPLE SIGNATURES. A majority of the members of the
Finance Committee or any one member authorized by such Committee shall
have authority to execute all documents, reports or other memoranda
necessary or appropriate to carry out the actions and decisions of the
Finance Committee. The Trustee, any investment manager or any other
interested party may rely upon any document, report or other memorandum
so executed as evidence of the Finance Committee action or decision
indicated thereby."
16. The first paragraph of Section 15.01 is hereby amended to read as
follows:
"15.01 AMENDMENT. The Company, through the Human Resources
Committee of its Board of Directors, reserves the right to amend the
Plan from time to time, provided that no amendment shall, except as
otherwise provided in this Plan or authorized by law, permit any part
of the Trust Fund to revert to an Employer or Related Employer or
permit any part of the Trust Fund to be used for, or diverted to,
purposes other than the exclusive benefit of the Participants, their
surviving spouses and Beneficiaries. Each such amendment shall be
effective with respect to a subsidiary of the Company that has adopted
the Plan without further action by the subsidiary."
17. The first sentence of Section 15.03 is hereby amended to read as
follows:
"The Company, through the Human Resources Committee of its Board of
Directors, may terminate the Plan at any time in its entirety or with
respect to any Employer or any division by written notice delivered to
the Trustee."
18. Section 17.01 is hereby amended to read as follows:
"17.01 DELEGATION OF AUTHORITY BY SUBSIDIARIES. Each subsidiary
of the Company that adopts the Plan hereby irrevocably grants to the
Company, its Board of Directors, the Finance Committee and the
Administrative Committee, exclusive authority to exercise all the
powers conferred on them by the terms of the Plan, including the power
vested in the Human Resources Committee of the Board of Directors to
amend or terminate the Plan, and each adopting subsidiary irrevocably
appoints the Company, its Board of Directors, the Finance Committee and
the Administrative Committee as its agents for such purposes. In
addition, each subsidiary of the Company that adopts the Plan shall
automatically become a party to the Trust without further action on its
part."
<PAGE>
19. Section 18.02 is hereby amended to read as follows:
"18.02 FIDUCIARY RESPONSIBILITY.
(a) ALLOCATION OF RESPONSIBILITY. All fiduciaries with
respect to the Plan and Trust shall be required to meet the
prudence, diversification and other fiduciary responsibilities of
applicable law to the extent such requirements and
responsibilities apply to them, provided each fiduciary shall be
responsible for carrying out only the requirements,
responsibilities and duties placed upon such fiduciary by
provisions of the Plan and Trust Agreement. In particular:
(i) An Investment Manager shall have full
investment responsibility with respect to the assets of
the Trust for which it has the power of investment
direction and except as otherwise provided by law, the
other fiduciaries including, but not limited to, the
Trustee and the Finance Committee, shall have no duty or
responsibility with respect to the investment of such
assets as long as they are subject to the investment
direction of such Investment Manager;
(ii) The Trustee shall have full investment
responsibility with respect to the assets of the Trust
which are not invested pursuant to the direction of the
Finance Committee and are not subject to investment
direction of an Investment Manager and, except as
otherwise provided by law, the other fiduciaries
including, but not limited to, the Finance Committee
shall have no duty or responsibility with respect to the
investment of such assets so long as they are not
invested pursuant to the direction of the Finance
Committee or subject to the investment direction of an
Investment Manager;
(iii) The Trustee shall have no duty or
responsibility with respect to investment of assets of
the Trust so long as they are invested at the direction
of the Finance Committee or a duly appointed Investment
Manager;
(iv) The Administrative Committee shall have no duty
or responsibility with respect to the investment of the
assets of the Trust; and
(v) The fiduciaries, including, but not limited to,
the Trustee, the Finance Committee, the Administrative
Committee and any Investment Manager shall have no
responsibility for the investment elections made by
Participants, except as otherwise provided by applicable
law."
<PAGE>
20. Section 18.03 is hereby amended to read as follows:
"18.03 PROHIBITED TRANSACTIONS. Neither the Trustee, nor the
Finance Committee, nor any Investment Manager, nor any Participant or
Former Participant who directs the investment of his or her Account
shall engage in a transaction which the Trustee, Finance Committee,
Investment Manager, Participant or Former Participant knows or should
know is prohibited by Section 406 or 407(a) of ERISA or by Section 4975
of the Code, unless an appropriate exemption or exemptions have been
granted by the Department of Labor under Section 408 of ERISA and the
Department of the Treasury under Section 4975(c)(2) of the Code."
21. This Amendment shall be effective generally January 1, 1994;
provided, however, that parts 9 and 11 shall be effective January 1, 1993,
and parts 3 through 7, 12, 13, 15, 18 and 19 shall be effective May 19,
1994.
Exhibit 10.23
FIFTH AMENDMENT
TO THE
HANNAFORD BROS. CO. 1988 STOCK PLAN
The Hannaford Bros. Co. 1988 Stock Plan (the "Plan") was adopted by the
Board of Directors, subject to shareholder approval, February 4, 1988, and
approved by shareholders on May 25, 1988. The Plan was last amended
effective January 1, 1994. The Plan is hereby amended in the following
respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Subsection (i) of Section 2 is hereby amended to read as follows:
"Employee' shall mean any person who is employed by the
Corporation or any Subsidiary and who is (i) an officer of the
Corporation or of any Subsidiary, (ii) responsible for the general
management of a division or department of the Corporation, a
Subsidiary, or a major portion of the consolidated operations of the
Corporation, or (iii) any other salaried employee of the Corporation or
any Subsidiary."
3. Section 11 is hereby amended by deleting the last paragraph
thereof, which reads:
"In order to further protect the Participants' rights under then
outstanding Awards upon the occurrence of a 'Change in Control Event'
as defined in this Section, the Committee, as constituted before such
event, may, in its sole discretion, either at the time an Award is made
or at any time thereafter, make such adjustments to an Award as it
deems appropriate to reflect such event."
4. This Amendment shall be effective January 1, 1994.
Exhibit 10.28
June 1, 1994
Roger W. Hoyt
9 Woodgate Road
Scarborough, ME 04074
Re: RETIREMENT
Dear Roger:
This letter confirms the terms of the agreement between you and Hannaford
Bros. Co. (the "Company") regarding your retirement from the Company and the
implementation of certain retirement benefits as outlined in a letter to you
from Hugh Farrington dated September 9, 1992 (the "Prior Letter").
1. Your last day of work as an employee of the Company will be June 30,
1994 (your "Retirement Date").
2. On June 30, 1994, the Company will pay you out of the SERP a "lump
sum" supplemental pension benefit in the gross amount of $99,041.
This payment represents the value of the enhanced pension benefit
you would have received had you elected to participate in the Early
Retirement Incentive Program offered in 1992, pursuant to paragraph
2 of the Prior Letter.
3. In addition, on June 30, 1994, the Company will pay you out of the
SERP the lump sum amount of $113,700. This amount is in lieu of
retiree medical benefits and is intended to equal the present value
of retiree medical coverage for you and your wife which you would
have had available to you had you participated in the Early
Retirement Incentive Program in 1992.
4. In lieu of the annual housing subsidy which you are currently
receiving, on June 30, 1994, the Company will pay you out of the
SERP the lump sum amount of $5,808.77. Upon payment of this amount,
any and all obligations which the Company may have to contribute to
your mortgage payments or housing costs will cease.
5. Upon retirement, you will be eligible to continue to participate in
the Long-Term and Short-Term Incentive Plans provided by the Company
for award periods commencing with, or prior to, the Company's
current fiscal year. Accordingly, you will be entitled to receive
payment from each Plan in accordance with its terms.
6. Upon retirement, you will no longer be eligible to receive awards
under the Company's stock option plan. Any stock options you then
hold must be exercised, under the terms of the plan, within ninety
(90) days after your retirement. In the event that you elect to
exercise any such options which contain a reload provision and were
granted to you after 1990 by tendering shares of the Company's stock
before your Retirement Date, you will receive a "reload" option for
<PAGE>
a number of shares equal to those tendered and having a term equal
to the remainder of the term of the options being exercised (but in
no event longer than three years following your Retirement Date).
7. All other accrued Company benefits (401(k), Pension Plan, SERP,
Deferred Compensation Plan, etc.) will be paid to you in accordance
with the provisions of those plans. After your Retirement Date,
except as provided by the applicable plans, you will have no further
accrual of Company benefits.
8. In consideration of the benefits extended to you under this
agreement to which you would not otherwise be entitled, your
signature below constitutes your agreement to hereby waive, release
and forever discharge the Company, its subsidiaries and affiliates,
and their respective shareholders, directors, officers, employees,
agents, successors and assigns of and from any and all claims or
causes of actions which you ever had or may hereafter claim to have
and which are connected in any way, directly or indirectly, with
your employment by the Company or its affiliates, including but not
limited to claims arising out of the Prior Letter, but expressly
excluding claims arising out of the failure of the amount paid in
lieu of retiree medical benefits to adequately cover the cost of
medical coverage as intended hereunder.
This letter sets forth the entire agreement between you and the Company
regarding your retirement from the Company (it being understood that you and
the Company intend to negotiate and execute a separate Consulting Agreement
relating to certain other matters, including the provisions of consulting
services by you as an independent contractor). This agreement may be
amended only by a written document signed by both you and the Company and
will be governed by the laws of the State of Maine.
If this letter sets forth our understanding and agreement accurately, would
you please sign both copies, return one to me, and keep one for your files.
Sincerely yours,
s/Hugh G. Farrington
Hugh G. Farrington
President and
Chief Executive Officer
Seen and agreed to this
1st day of June, 1994
s/Roger W. Hoyt
Roger W. Hoyt
Exhibit 10.29
August 15, 1994
Roger W. Hoyt
9 Woodgate Road
Scarborough, ME 04074
Re: CONSULTING AND NONCOMPETITION AGREEMENT
Dear Roger:
Hannaford Bros. Co. (the "Company") and you have executed a letter agreement
dated June 1, 1994 outlining our mutual understanding regarding certain
matters, including supplemental retirement benefits which the Company
provided to you upon your retirement. This letter sets forth our further
understanding regarding your noncompetition with the Company following your
retirement.
1. NONCOMPETITION AGREEMENT. Until the last to occur of December 31,
1997, or the expiration of any renewal periods hereof, as described
in paragraph 2 below, you agree not to work for any competitors of
the Company within any of the Company's present or future marketing
areas without prior written approval from the Company's CEO, which
approval may be granted or withheld in the CEO's absolute
discretion.
2. RENEWAL. This agreement may be renewed for up to three additional
one-year periods. After the expiration of the initial term on
December 31, 1997, this agreement will renew automatically for each
of such one-year periods unless either party sends written notice of
termination to the other party no later than thirty (30) days prior
to the expiration of the then current term.
3. COMPENSATION. In consideration of your agreement not to compete
with the Company as described herein, the Company will pay you the
amount of $75,000 per year, beginning January 1, 1995, and
continuing for each year of the initial term of this agreement and
any renewal periods. Compensation will be paid in equal
installments of $18,750 per quarter on the first day of each fiscal
quarter in which this agreement remains in effect.
4. TERMINATION. The Company shall have the right to terminate this
agreement for cause if it determines, in good faith, that you have
breached the provisions of paragraph 1 above. In the event the
Company elects to terminate this agreement for cause, it will
provide you with seven (7) days written notice.
<PAGE>
5. CONSULTING SERVICES. Beginning on January 1, 1995, and so long as
this agreement remains in effect, you agree to provide the Company,
for no additional compensation, such consulting services on the
topics of both existing and future supermarket operations and on
store formatting and design as may be requested by the Company's
CEO, but in no event will the provision of such services exceed a
total of eight (8) weeks per year. In addition, you agree to attend
FMI and certain industry conventions and other similar activities at
the request of the Company's CEO. The Company will reimburse you
for all reasonable out-of-pocket expenses incurred by you in
connection with any such activities. Upon request by the Company,
you agree to provide reasonable written documentation supporting
such expenditures. We agree that any services rendered by you
pursuant to this paragraph shall be rendered as an independent
contractor and not as an employee, partner, joint venturer, agent,
etc. You further agree that the Company shall have no
responsibility to furnish any workers' compensation insurance and
that you will provide reasonable amounts of automobile and liability
insurance coverage at your own expense. You acknowledge that, in
your capacity as an independent contractor, you will not be entitled
to any of the employee benefits available to Hannaford associates
nor will the Company supply you with an office, secretary, or any
other technical or personnel support.
6. MISCELLANEOUS. Upon the written request of either you or the
Company, the other party agrees to execute such other documents as
you, the Company and our respective counsel reasonably deem
necessary or advisable to implement the terms of this letter. This
agreement sets forth the entire agreement between you and the
Company regarding your agreement not to compete with the Company and
any services you may render to the Company as an independent
contractor. This agreement may be amended only by a written
document signed by both you and the Company and will be governed by
the laws of the State of Maine.
If this letter accurately sets forth our understanding and agreement, would
you please sign both copies, return one to me, and keep one for your
records.
Sincerely yours,
s/Hugh G. Farrington
Hugh G. Farrington
President and
Chief Executive Officer
Seen and agreed to this
15th day of August, 1994.
s/Roger W. Hoyt
Roger W. Hoyt
Exhibit 21
Hannaford Bros. Co. Parents and Subsidiaries
Percentage
State of Voting
of Securities
Registrant Incorporation Owned
Hannaford Bros. Co. Maine
Subsidiaries (1)
Analytical Services, Inc. Maine 100.00%(2)
Athenian Real Estate Development, Inc. Virginia 100.00%(2)
Boney Wilson & Sons, Inc. North Carolina 100.00%(2)
Cottle's Shop 'n Save, Inc. Maine 100.00%(2)
Hannaford Properties, Inc. Maine 100.00%(2)
Hannaford Trucking Company Maine 100.00%(2)
Martin's Foods of South Burlington, Inc. Vermont 100.00%(2)
MB-New York, Inc. Maine 100.00%(2)
MB-Save, Inc. Maine 100.00%(2)
MB-Super, Inc. Maine 100.00%(2)
Plain Street Properties, Inc. Maine 100.00%(2)
Progressive Distributors, Inc. Maine 100.00%(2)
Freezer Properties, Inc. Maine 100.00%(3)
The Sampson Supermarkets, Inc. Maine 100.00%(2)
Sun Foods, Inc. New Hampshire 100.00%(3)
Shop 'n Save-Mass., Inc. Massachusetts 100.00%(2)
Shop 'n Save Realty, Inc. Maine 100.00%(2)
Shopping Center Properties, Inc. Maine 100.00%(2)
Warehouse Properties, Inc. Maine 100.00%(2)
(1) Each of the subsidiaries is included in the consolidated financial
statements of the Registrant.
(2) Percentage of voting securities shown is that owned by the
Registrant.
(3) Percentage of voting securities shown is that owned by the
subsidiaries' immediate parent and not that owned by the Registrant.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders of
Hannaford Bros. Co.:
We consent to the incorporation by reference in the registration
statements of Hannaford Bros. Co. and subsidiaries on Form S-8 (File Nos.
2-77902, 2-77903, 2-98387, 33-1281, 33-22666, 33-31624 and 33-41273) of our
report dated January 23, 1995, on our audits of the consolidated financial
statements and financial statement schedules of Hannaford Bros. Co. and
subsidiaries as of December 31, 1994 and January 1, 1994 and for each of the
three years in the period ended December 31, 1994, which report is included
in this Annual Report on Form 10-K.
s/Coopers & Lybrand
Portland, Maine
March 16, 1995
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